The Warehouse Group would have made a $4.3m loss without the wage subsidy. Photo / Paul Taylor
The Warehouse Group would have made a $4.3m loss without the wage subsidy. Photo / Paul Taylor
The Warehouse Group has defended laying off hundreds of workers just months after it took almost $68 million in wage subsidies.
The company is under fire from both main party leaders but said its sales had plunged 67 per cent because of the pandemic.
It said its proposed cuts thataffected up to 750 jobs across all 92 of its stores had been "planned for some time" before the onset of Covid-19.
During the Newshub leaders' debate on Wednesday, moderator Patrick Gower asked if it was immoral for large companies to take millions of dollars in Government wage subsidies and to lay off workers just months later and post large financial earnings.
Prime Minister Jacinda Ardern in her answer, referring to The Warehouse Group, said no, adding: "I expressed my views at the time when I heard that The Warehouse was one of those groups who is taking a similar position.
"The wage subsidy helped retain 1.7 million people in work, and it may be within the rules to do what these companies are doing, it doesn't mean it is in the spirit of fairness.
She said she believed it was morally wrong.
Judith Collins agreed, she said: "Yeah, I believe $500 million a week, which is pretty much what it is, that's the same amount of money to build a regional hospital ... If people don't need the money they shouldn't have taken it."
Collins went on to say that companies that did this should pay it back.
"It's not fair, New Zealand taxpayers are going to hock to pay for that, it's not fair."
She said if she became prime minister later this month she would change the law to be able to claw back the wage subsidy from some big companies.
The owner of The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo7 retail chains and e-commerce business TheMarket.com, said the wage subsidy it received was applied for and used on the basis that it was intended to - to pay employees in companies that experienced a greater than 30 per cent reduction in revenue in April.
"The wage subsidy was critical in enabling us to pay our team members in full during that time and it helped cover just over 50 per cent of our wage bill. We were pleased that we could relieve the stress about income for our 11,000 team members at a time of uncertainty by topping up the wage subsidy to pay our team members 100 per cent of their normal pay," the spokeswomen said.
The group technically did pay its employees full salary - but not at the time.
In April, it sent a letter to its staff earning between $60,000 and $100,000 to take a 10 per cent pay cut, and those earning anything above to take a 20 per cent, cut effective from May 1.
Two months later, the company announced it would repay its staff who took wage cuts because their sales during Covid-19 restrictions were "higher than expected".
Its wage bill is about $525m per year, the spokeswoman told the Herald.
"Following the April and May period, we did go on to make some changes to our store operating model which is likely to result in a reduction of roles. That process is still ongoing but is something that has been planned for some time.
"We've seen an increase in customers choosing to shop online and use Click&Collect options, especially since Covid-19, as well as shopping more at nights and weekends, and our rosters needed to be updated to support that. We understand people change is tough at this time but to be able to set ourselves up to continue into the future is crucial."
The group's restructuring plans were ongoing, the group said, and is expected to cut between 500 and 750 jobs, the equivalent of 320 fulltime roles.
The Herald has contacted the group for further comment, including to ask if it was considering paying back the wage subsidy it received.
"The Minister of Finance confirmed that we used the subsidy as it was intended and it went to our people 100 per cent. However, if the government (whoever wins the election) decides to change the rules retrospectively, we will work with them, but believe that any change needs to be applied consistently," the spokeswoman said.
Across its brands, The Warehouse and Warehouse Stationery chains received $52m in subsidies, Noel Leeming $12.2m, Torpedo7 $3.2m and the TheMarket $400,000.
The Warehouse Group is yet to post its financial earnings for the year. It was supposed to have posted its earnings in the third week of September, but had taken up the NZX extension offered because of disruption from Covid-19.
It is now expected to post its annual result on October 14 or 15.
In its half-year to the end of January, the company posted a $28.7m net profit after tax.
