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Woolies reveals more wage underpayment

Business

Woolworths has told investors it expects the bill from its wages underpayment scandal to come in at the lower end of the $200 million to $300 million range it previously flagged, even as more cases come to light.

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Chairman Gordon Cairns confirmed at Monday’s annual general meeting in Sydney that further underpayments had been uncovered at businesses including Dan Murphy’s and BWS, though the amount was “nowhere near” the extent of underpayments found at its supermarket division.

Shareholders are set to vote on whether the company has shaved enough from its executive team’s pay packets following October’s revelation it had underpaid at least 5,700 staff over nine years.

Chief executive Brad Banducci has already given up a potential $2.6 million bonus and  Cairns has also taken a 20 per cent cut to his $790,531 board fee, after the company only discovered it had been keeping cash from employees when shocked store managers complained they were earning less than their staff.

Woolworths is also facing an employee class action which accuses it of substantially underestimating the scale of the underpayment bill, something the company denies.

Cairns – who took exception to one shareholder’s use of the term “wage theft” – said he did not have concrete guidance, but was hopeful the total remediation bill would be at the lower end of the $200 million to $300 million.

“To discover that we have underpaid so many of our team members has been incredibly disappointing,” Cairns said.

Investors will also vote at Monday’s meeting on whether to push ahead with the first stage of the planned restructure and demerger of Woolworths’ hotel, liquor and gaming businesses.

The segment is set to become a new listed entity called Endeavour Group in 2020 if all goes to plan.

The underpayments scandal comes during what has otherwise been a successful 2019 for the company, with full-year profit up 7.2 per cent to $1.75 billion and comparable sales at its core food segment up 3.1 per cent in spite of a weak retail outlook and soft results at Big W and the liquor division.

The first eight weeks of FY20 were even better at its 1,000-plus network of supermarkets, as Lion King Ooshies collectables helped to drive 7.5 per cent comparable sales growth.

Second quarter sales figures are yet to be finalised.

Shares in Woolworths climbed 0.48 per cent to $37.605 by 1145 AEDT on Monday, up 27.82 per cent in 2019.

-AAP

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