Woolworths says more staff underpaid, makes ‘pleasing’ start to year

Woolworths has found more cases of ‘disappointing’ wage underpayment, as its AGM backed a restructure.

Woolworths CEO Brad Banducci (left) and Woolworths chairman Gordon Cairns at the retailer’s AGM. Picture: AAP

Woolworths has revealed more cases of “incredibly disappointing” wage underpayment at its businesses.

The admission in October that Woolworths had underpaid 5700 workers as much as $300 million prompted another apology at Monday’s annual meeting.

Chairman Gordon Cairns said more cases of wage underpayment had subsequently been discovered at other Woolworths businesses such as Dan Murphy’s, BWS and Big W.

Mr Cairns said Woolworths had expected underpaid wages to have occurred outside the core supermarkets business, and that had since been proven correct.

However although there were more cases of wage underpayment, they were very small in number.

Mr Cairns also confirmed that the forecast total cost of repaying staff, plus interest, remained in the $200 million to $300m range, but that he expected that to come in at the “bottom end” of that range.

Earlier, Mr Cairns again apologised for the wage scandal, which he described as “

incredibly disappointing”.

“However, I am proud of the way we handled this, which is a testament to the strong ethics underpinning our culture.

“It was brought to our attention by three of our team members in February this year. We immediately investigated, found their assertions about their individual circumstances to be correct, and we remedied,” Mr Cairns said.

“We then began an across-the-board investigation, which continues given we are checking every shift for every salaried team member back as far as this has been an issue or records exist.

“For 2018 and 2019 alone, this involved 11 million data points each year. We self-reported to the Fair Work Ombudsman, and we have remained in contact with them, before and after we calculated the potential quantum of the problem.”

The wages issue has also come at a personal cost to Mr Banducci, who sacrificed short-term bonuses worth as much as $2.6 million, while Mr Cairns took a 20 per cent cut to his board fee.

The issue was expected to be debated at the AGM ahead of a vote over Woolworths' remuneration report.

The company’s remuneration report was approved by 94.23 per cent of shareholders, while Holly Kramer, Siobhan McKenna, Kathee Tesija, and Jennifer Carr-Smith were each successful in their bid for re-election to board.

Woolworths CEO Brad Banducci (left) and chairman Gordon Cairns at the AGM. Picture: AAP

New structure

Woolworths shareholders later voted overwhelmingly in favour of creating a new company vehicle, Endeavour Group, that will house the merged businesses of the retailer’s liquor chains and pubs business.

At an EGM held today, directly after the Woolworths AGM, votes lodged with the company showed that 99.08 per cent of shares were in favour. The results showed that 81.28 per cent of shareholders were also in favour.

The support for the merger of the Dan Murphy’s and BWS chains, as well as other liquor assets, with the pubs and hotels business, could be a first step in a potential demerger of Endeavour Group into an independent company next year.

Mr Banducci earlier encouraged shareholders to vote in favour of the creation of Endeavour Group.

“We believe that this transaction is in the best interests of shareholders and will provide both businesses with greater focus, simplify both groups and enable Endeavour Group to pursue its growth strategy,” he said.

The merger of the liquor retail arm, which includes the Dan Murphy’s chain, with the hotels and pubs group, run by the Mathieson family, is a first step in the possible demerger of the combined businesses to form a new independent company.

‘Pleasing’ sales

Woolworths chief executive Brad Banducci earlier told shareholders of a “pleasing” start to fiscal 2020, with strong sales momentum, although he cautioned that the uncertain consumer environment remained a factor.

Mr Banducci, in his address to the annual meeting, said the supermarket was experiencing a continuation of strong sales helped by key promotions, such as toy giveaways, and in-store initiatives.

“It has been a pleasing start to fiscal 2020, with strong sales momentum across the group,” he said.

“Sales growth in Australian food was particularly strong with the success of Lion King Ooshies, Discovery Garden, the continued growth in Online and the ongoing benefit of our Renewal program,’’ Mr Banducci said.

For the first quarter of 2020 Woolworths posted a 6.6 per cent rise in like-for-like sales growth as it blitzed Coles and other retailers.

“We can’t comment on the second quarter in detail at this stage given we still have two very important trading weeks in the quarter to go, but are generally pleased with trading to date,’’ Mr Banducci told the AGM.

“Given it is only nine ‘sleeps to Christmas’, the priority for all of our businesses right now is to deliver the best possible Christmas and festive season experience for our customers.

“We remain energised by the material opportunities we have across the group to deliver value for both customers and shareholders over the remainder of 2020, despite some uncertainty around the consumer environment.”

Both Mr Banducci and Mr Cairns spoke of the volcano disaster in New Zealand, the victims of which included some Woolworths staff.

“Before I begin I’d like to echo Gordon’s sentiment in regards to the tragedy on White Island in New Zealand last Monday,” Mr Banducci said. “This has had a deep impact on many of our team members, particularly those who worked alongside those who lost their lives in the eruption.

“This is a truly tragic event and our hearts go out to the family and friends of all those who lost their lives.”