Super Retail Group sets aside $8m to compensate underpaid store set up staff

The owner of Supercheap Auto, Ray’s, Rebel and BCF has admitted it underpaid staff by as much as $7.9m over 8 years.

A customer in a Rebel Sport store in Queensland. Picture: AAP

Super Retail Group, which owns retail stores such as Supercheap Auto, Ray’s, Macpac, Rebel and BCF, has admitted it has underpaid its staff engaged in opening new stores by as much as $7.9 million over the last eight years in a wages mishap that might have impacted more than 4500 staff.

Super Retail (SUL), which this morning posted a 26 per cent lift in full-year net profit to $128.3m as sales lifted 4.2 per cent to $2.57 billion, discovered recently the underpayment of its staff after a new human resources executive began investigating the way it paid additional overtime and allowances to these staff members between 2010 and 2018.

Accounting firm BDO is conducting an external review of entitlements for team members who worked on store set ups from July 2010 when the modern award system commenced.

The retailer said today it had made a provision of $7.9m in its accounts, which it has described as a “conservative estimate”, to repay team members involved in set-up projects around new store openings.

“Starting next month, back payments, including interest, will be made to affected team members to ensure they are fully compensated,’’ Super Retail said.

Chief executive Peter Birtles said the company was “very sorry” that it had “let down” some of its team members and fallen short of our standards in this case.

“We identified this issue through our own processes, investigated it internally and engaged expert external advice. We have fixed this mistake to ensure both short term and permanent set up team members are paid correctly. We have also corrected our store set up arrangements.”

“This was a genuine mistake that we deeply regret.”

Turning to the latest annual financial results, Super Retail said normalised net profit after tax at $145.3m was an increase of 7 per cent with the profit leap helped by the recent $NZ144m acquisition of camping retailer Macpac that was completed at the end of March.

“We are pleased to report a record result for the company in a year in which we have also made significant progress in delivering on the three core elements of our strategy,’’ Mr Birtles said.

Sales for its auto segment, Supercheap Auto, rose by 5.3 per cent to $1.006bn with like-for-like sales growth of 3.6 per cent. Segment earnings grew by 4.9 per cent to $116.4m. Online sales for the auto stores rose by 85 per cent, driven primarily by a click-and-collect service.

Its outdoor retailing arm, which consists of Rays, BCF and Macpac, saw sales rise by 4.8 per cent to $579.8m as earnings rose 16.5 per cent to $29.6m. At BCF sales rose 3.7 per cent and like for like sales grew by 1.1 per cent.

The BCF business, which sells a range of boating, camping and fishing gear, suffered an 11.9 per cent fall in earnings to $27.3m as gross margins slid due to tough price competition and an increase in operating costs as a percentage of sales.

The newly acquired Macpac business reported $31.4m in sales and $7.8m in earnings in the fourth quarter. On a proforma basis, the business posted $94.7m in sales and $15m in earnings. Like-for-like sales growth was 8 per cent for fiscal 2018.

Total sales for its sporting stores, Rebel, grew 3.2 per cent to $979.2m with 2 per cent like for like sales growth. Earnings lifted by 0.2 per cent to $91.5m, but margins fell as a result of the increase in promotional activity associated with the Amart stores acquisition.

Super Retail said it had a “solid” start to fiscal 2019, and that for the six weeks to August 11 like for like sales growth at Supercheap Auto rose 5 per cent, Rebel was up 3 per cent, BCF up 3 per cent and Macpac up 7 per cent.