SUPER Retail Group’s shares have jumped more than 10 per cent despite announcing a 20 per cent drop in first-half profit and admitting its underpayments problem is worse than first thought.
Net profit for the company, which owns Rebel Sport, Supercheap Auto, BCF and Macpac, fell to $57.4 million despite modest revenue growth of 2.9 per cent to $1.44 billion.
Super Retail Group announced in its results on Thursday it was adding another $8 million to the $53.2 million it already has to give back to staff.
It comes after Wesfarmers admitted to $24 million in staff underpayments and Coles said said it was expecting a $20 million hit after revealing managers had been underpaid during the past six years.
The group has updated its total estimate for team member back payments from $53.2 million as at December 2018 to $61.2 million as at December 28, 2019, excluding execution costs.
The estimate increase of $8 million since December 2018 has resulted in a $9.5 million after-tax expense in the half.
The Queensland-based company said total costs to execute the remediation including the prior period were $8.6 million after tax.
Super Retail Group said that while the total amount of retail manager and set-up team member underpayments was lower than initially estimated, it had identified additional team members also impacted by overtime underpayments.
Supercheap Auto sales increased by 3.7 per cent to $550.7 million and Rebel sales increased by 3.6 per cent to $542.8 million, while BCF sales increased by 0.7 per cent to $283.5 million.
However, Macpac sales fell by 0.9 per cent to $66.5 million as like-for-like sales in Australia decreased by 9.5 per cent following the impact of summer bushfires on peak trading.
On the impacts of the coronavirus, the company said while a “significant proportion” of the group’s products were sourced from China, it used only two factories in Wuhan, the Hubei province city at the epicentre of the outbreak.
“There is no expectation of a material impact on availability of product in the short term given current inventory levels,” it told the ASX on Thursday.
“The group will continue to monitor ongoing developments in China and undertake appropriate contingency planning.”
Chief executive Anthony Heraghty said following the “extraordinary weather events” of the summer, he was now seeing positive trends in the business, with sales momentum improving in Supercheap Auto, Rebel, and Macpac.
Super Retail Group announced an interim dividend of 21.5 cents per share, fully franked, in line with a year ago.
The company’s stock had risen by 4.28 per cent, or 39 cents, to $9.50 at 1155 AEDT, having risen as high as $10.19 at 1049 AEDT.