The Warehouse Group posts profit - but only because of the wage subsidy

The Warehouse Group would have made a $4.3m loss without the wage subsidy. Photo / Paul Taylor

The Warehouse Group has posted a $44.5 million profit in the 2020 financial year.

The company, which operates The Warehouse, Warehouse Stationery, Noel Leeming, Torpedo7 and TheMarket.co.nz would have made a loss without the $67.7m it received in wage subsidies.

It will not pay out a dividend despite having a net cash position of $168.1m.

The preliminary unaudited $44.5m net profit after tax in the 12 months to August 2 is a 32 per cent decrease on its earnings in FY19. It would have made a loss of $4.3m without financial support from the government.

The group posted sales revenue of $3.2 billion in the year, up 3.3 per cent on the prior year. Approximately $1.5b of that was generated in its second-half of the year, with sales up 4.1 per cent in the period.

The Warehouse said "given the loss prior to the wage subsidy, as well as the continued uncertainty around economic activity and trading outlook" its directors had decided not to pay a dividend.

"Subject to trading over the critical Q2 period and any further alert level restrictions and adverse economic impacts of Covid-19, the group hopes to return to paying dividends in line with its dividend policy for FY21," it said in a NZX statement.

It posted unaudited adjusted net profit after tax of $80.7 million, including adjustments for unusual items of $36.3 million, up 9 per cent on last year.

The group will post its audited results on October 15.

Last week The Warehouse Group defended laying off hundreds of workers just months after it took the wage subsidy.

It came under fire from both main political party leaders during a leaders debate but justified the redundancies, saying its sales had plunged 67 per cent or $265m during the nationwide lockdown period.

The group told the Herald that the subsidy from government had covered just 50 per cent of its wage bill during that time.

Its annual wage bill for 11,000 staff is approximately $525m per year.

It is not known exactly how many staff the group has laid off since the onset of the pandemic as the process is still "ongoing". However, it had previously said that the proposed cuts would affect up to 750 jobs, the equivalent of 320 full time roles, across 92 of its stores.

It stands by its claims that the cuts had been "planned for some time" before Covid-19.

MORE TO COME.