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Premier Investments, the retail group controlled by billionaire Solomon Lew, says it will hang on to more than $15m in jobkeeper payments it received in the six months to the end of January despite profit soaring by almost 90% in the same period.
“Consistent with the Australian federal government’s policy of keeping people in jobs and connected to their employers during this once-in-a-century health crisis, Premier is committed to the $15.6m net benefit of “jobkeeper 1” recognised in 1H21 being used to continue to pay its full-time and part-time workforce their contracted hours, should they potentially be stood down and unable to work due to any further state government mandated snap Covid-19 lockdowns,” the company said in a statement to the stock exchange.
The group did not disclose the gross amount of jobkeeper it received, but industry sources estimate it at about $100m.
Premier, which owns key retail chains Smiggle, Peter Alexander, Just Jeans and Portmans, has been under intense political pressure to follow the example set by other companies that returned to profit after the coronavirus crisis, including Super Retail Group, Toyota Australia, Domino’s and miner Iluka, and return the money to the government.
Net profit for the 27 weeks to the end of January, which included the hardest period for the retail sector of coronavirus pandemic, jumped 88.9% to $188m.
Underlying earnings before interest and tax rose by a similar amount to $238m, outpacing the top of Premier’s own guidance range by $5m.
Premier’s result comes after research by advisory firm Ownership Matters revealed that 34 of Australia’s largest companies claimed jobkeeper wage subsidies in the second half of 2020, pocketing a total of $284m even though their profits actually improved compared with before the pandemic.
In parliament, the opposition treasury spokesman, Jim Chalmers, questioned the treasurer, Josh Frydenberg, over the government’s decision to end the jobkeeper subsidy this weekend – a move Treasury estimates will cost up to 150,000 Australians their jobs.
“How many of them could he afford to support beyond this weekend if he hadn’t wasted so much money on companies which didn’t need it?” Chalmers asked.
Frydenberg said the program was ending on Treasury advice.
“We have delivered more jobs, Mr Speaker, and we have helped to cushion the blow from the biggest economic shock since the Great Depression,” he said.
The company said it delivered the bumper half-year profit despite store closures ordered by the Victorian government in August, September and October that cost it $44m in sales.
These closures “more than offset the eligible wage subsidy support recognised during the half,” Premier told the ASX.
“To have delivered these record results in a very difficult and volatile environment is a truly outstanding achievement,” Lew, who is Premier’s chair, said.
The company said jobkeeper payments were not taken into account when setting executive bonuses or dividends paid to shareholders.
Shareholders will receive an interim dividend of 34c a share, entitling Lew, who owns 42.43% of the company, to a payment of $22.9m.
This is on top of $24.25m Lew received in dividends for the 12 months to 25 July last year, a period in which Premier received $70m in government subsidies and profit surged almost 30%, to $138m.
Chief executive Mark McInnes said the company had taken a punt on increasing its inventory ahead of the key summer Black Friday, Christmas and January sales.
“This decision ensured we were in stock to deliver significantly higher sales and gross margin,” he said in a statement.
“Those same inventory investments and in-stock strategies have continued” into the second half of 2020/21, with sales already tracking 32% higher in the first seven weeks.
Premier’s online sales also exploded during the half-year by 61%, making up 2% of all sales.
Its best performing brand was Peter Alexander, which sells sleep and homewear for adults and children, which delivered record sales of $208m.
Source: The Guardian
Keyword: Premier Investments holds on to $15m in jobkeeper after profits almost double | Business