Reimbursing staff adds to loss

AUCKLAND: Smiths City Group took a $1.5 million charge on what it expects to reimburse underpaid staff following this year’s Employment Court ruling that employees should have been paid for attending sales meetings, adding to a bigger trading loss than forecast and prompting it to suspend dividends.

The Christchurchbased retailer recognised the charge as a provision in its latest accounts, which note the payments will be calculated by August 8. It will contribute to a $9.9 million trading loss in the 12 months ended April 30, bigger than the projected loss of between $1.25 million and $1.75 million and turning around an operating profit of $2 million a year earlier.

‘‘In retrospect, we agree with the court,’’ chief executive Roy Campbell said in a statement.

‘‘We are working to finalise the exact figure and will move to reimburse all affected staff progressively over the coming months as we locate those that worked for us in the past years.’’

The company reported a net loss of $7.2 million, or 13.6c per share, in line with the April guidance, and turned from a profit of $2.4 million, or 4.5c, a year earlier. Revenue fell 5.1% to $215.9 million. The shares dropped 7.1% to 39c, adding to the 30% slide so far this year.

The retailer is into the fourth year of a fiveyear transformation programme to drop lowmargin business, improve inventory management and expand its presence in Auckland, creating a national chain with a broader customer base.

The company will not pay a final dividend this year to preserve funds and reinvest them back into the business, and the board does not expect to resume payments in the current financial year. —