Retail payout slashed

Wesfarmers admits $24m underpayment

WESFARMERS has slashed its interim payout after admitting to $24 million in staff underpayments – including $9 million at Target – adding to a teetering pile of payment issues blighting Australia’s retail landscape.

In a first-half result otherwise buoyed by the retail performance of Bunnings, Kmart and Officeworks, the Perthbased conglomerate identified a “payroll remediation” of $15 million for its industrial and safety division, as well as the discrepancy at Target.

The admission comes a day after Wesfarmers’ former stablemate Coles said it was expecting a $20 million hit after managers at its supermarkets and liquor division were underpaid for six years.

Wesfarmers in November also admitted it had discovered superannuation underpayments at Bunnings and its industrial businesses Workwear Group, Blackwoods, Greencap, and Coregas, with that hit coming in at $6.1 million.

The company said yesterday it was otherwise pleased with improved comparative sales growth at Bunnings, Kmart and Officeworks over the half, though Target recorded a worse-than-expected $67 million sales slump.

Despite the underpayments issue and a decreased 75 cent fully franked dividend, shares in Wesfarmers hit a record high of $46.94 and were still 2.87 per cent higher at $46.55 at close.

Chief executive Rob Scott said the company had strengthened its monitoring and payment processes following the latest payments issue, adding that less than 1.0 per cent of the company’s workforce had been affected.

He said he could not rule out future underpayments as “people make mistakes”.

“(This) does show there have been significant issues across payroll systems across the market,” Mr Scott said.

“Complexity is not an excuse. We need to get this right.”

Mr Scott said while it was important there were repercussions for businesses who did the wrong thing “with intent”, he did not believe the introduction of more punitive penalties would necessarily change corporate behaviour.

“I’m yet to meet a CEO who doesn’t take this very seriously,” he said.