Nick Scali will repay $3.6m in JobKeeper and other support measures

Furniture retailer Nick Scali has caved in to public and political pressure and announced it will pay back millions in government support.

Staff and customers at the Nick Scali store in Brisbane’s Fortitude Valley. Picture: Attila Csaszar

Furniture retailer Nick Scali has done an about-face on keeping $3.6m in JobKeeper and wage subsidies from the government.

The chain drew heavy criticism for retaining the money after the it posted a 90 per cent lift first-half profit and almost doubled its interim dividend, and has decided to return the funds.

Chief executive Anthony Scali told The Australian on Monday night the board believed the JobKeeper funds should have been returned.

“The pressure came through, the board felt it was probably right to give it back given how well we did. My view is, let’s give it to some of the children’s hospitals, but the decision was to just give it back,” he told The Australian.

In an announcement made to the ASX late on Monday, Nick Scali said the company was “very appreciative of the federal government’s JobKeeper policy which was highly successful and of great assistance at the height of the pandemic – enabling the company to provide security of employment during a particularly uncertain time.

“Further, the JobKeeper scheme enabled the company to continue to pay employees throughout the state government-mandated closures in Melbourne throughout August, September and October, and continue to pay employees in full during other temporary COVID related store closures in South Australia and Western Australia as recently as last week, despite the completion of the subsidy program in September 2020.”

Nick Scali added that the company’s financial performance for the December half had gained from the consumer confidence and economy boost that flowed from these subsidies and economic measures to combat the fallout from COVID-19.

Nick Scali CEO Anthony Scali. Picture: Chris Pavlich

“The company fully recognises that it has benefited from the increased consumer confidence this program has created, which resulted in record sales and net profit after tax. The board of directors and management have considered the $3.6m wage subsidy received in the half-year ended December 31 and decided to refund this amount to the federal government.”

Last week Nick Scali chief Mr Scali told The Australian he had personally struggled over whether to return $3.6m in JobKeeper payments and wages subsidies in light of the retailer’s profit boom and near doubling of its dividend, but argued at the time his business contributed to Treasury coffers by paying double the amount of tax in the December half.

The furniture chain’s first-half result on Thursday showed net profit rising 89.9 per cent to $40.61m, which helped ratchet the interim dividend to 40c a share, from 25c last year.

Discussing the results last week, Mr Scali said the JobKeeper issue was a “hard one”.

“It is hard one because yes, our stores did close and we did use that to pay the bills, but the business boomed and we paid the government double the tax we paid them last year, in this half, and we are giving it back to the government more than twice back in taxes,” Mr Scali told The Australian at the time.

Nick Scali paid more than $17m in taxes in the first half, up $8m, he said.

But now public pressure looks to have shifted that position. Retailers that took in JobKeeper from the federal government and wages subsidies from New Zealand have come under increased pressure as they unveil their results this earnings season, with swollen profits and higher dividends feeding the argument from some that JobKeeper payments should be handed back.

Retailers such as billionaire Solomon Lew’s Premier Investments have reported strong earnings and declined to give wages subsidies back, while some other companies like Super Retail Group and Domino’s Pizza have returned funds.

Last week Andrew Leigh, Shadow Assistant Minister Treasury, called on the furniture retailer to return the wages funds.

“Will they follow the lead of Super Retail Group, Toyota Australia, Domino’s and Iluka by handing back JobKeeper they didn’t need? Or will they enjoy a near-doubling in profits, and simply funnel taxpayer support through to their shareholders?,” Mr Leigh asked.

“With a million people unemployed, a million underemployed, and a trillion in government debt, taxpayers can’t afford to be padding the pockets of Nick Scali’s shareholders. There’s only one right thing for them to do: pay their JobKeeper back.”