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Billionaire Solomon Lew will pocket $24.25m in dividends after his retail empire, Premier Investments, received almost $70m in wage subsidies during the coronavirus crisis.
Financial results released on Friday by Premier, which runs retailers including stationery group Smiggle and fashion chain Just Jeans, are likely to reignite the “dividendkeeper” debate over companies that have taken jobkeeper payments but also paid big dividends to shareholders.
Premier’s profit for the year to 25 July surged almost 30%, to $138m, despite the Covid-19 pandemic.
Lew on Friday denied that Premier’s dividend payment had anything to do with jobkeeper subsidies or the company’s decision to stop paying rent to many of its landlords.
“We didn’t take jobkeeper into consideration at all,” he said.
“In having the discussion with the board we made a commitment not to pay a dividend out of any jobkeeper funds received. So it’s purely on trading.”
The company did not disclose how much of the $68.7m in wage subsidies it received for its operations around the world came from jobkeeper.
However, chief executive Mark McInnes said jobkeeper was the “single biggest” wage subsidy payment the company received.
He said the company got no benefit from $35.5m of the total wage subsidies received because they were passed directly onto employees who were stood down and not performing any work for the company.
Premier closed its Australian stores before jobkeeper was announced, sending its sales plunging in the early part of the lockdown.
The steep drop in revenue of $131m between May and June qualified the company to receive jobkeeper for the majority of its workforce, McInnes said.
However, over the full year revenue was down by just 2%, from $1.275bn to $1.249bn.
McInnes said Premier benefited from a move to online shopping during the pandemic, and warned landlords the group was ready to close more stores if rents are not reduced.
“The swing away from shopping in store has sharpened our focus on shop profitability,” he said.
“We’ve closed 137 stores in the past seven years, demonstrating our willingness to walk away from stores with unrealistic rent.”
Premier declared a final dividend of 36c a share, down 1c from the previous year, totalling about $57m.
As Lew owns 42.43% of the company, this will entitle him to a payment of $24.25m when dividends are paid in January next year.
Premier is the latest company to pay a dividend after receiving jobkeeper subsidies, a trend that has sparked concerns that payments that are supposed to be used to keep employees connected to their work is instead being used to prop up dividend payments.
Research by proxy advisor Ownership Matters, conducted before Premier released its results, showed that 17 of the top 300 listed Australian companies that received jobkeeper paid out a total of $250m in dividends.
Labor frontbencher Andrew Leigh has raised concerns about the practice, together with the payment of executive bonuses by companies that received jobkeeper.
In parliament earlier this month, he attacked furniture retailer Nick Scali and dentist chain 1300 Smiles for taking jobkeeper and “diverting money for workers into shareholder payouts”.
Source: The Guardian
Keyword: Solomon Lew to get $24m in dividends after retail group given $70m in Covid subsidies | Australian economy