Rebel Sport owner Super Retail Group will repay six years’ worth of unpaid overtime and allowances to retail managers in an expected $43 million pre-tax hit to first-half earnings.
The company, which will post its audited half-year results on Thursday, said a review of employment arrangements showed $32 million in overtime hours had not been paid in accordance with the General Retail Industry Award over the past six years.
The Boating, Camping, Fishing and Ray’s Outdoor owner will also recognise $11 million in compensatory interest and has apologised to affected staff members, who represent an estimated 10 per cent of the group’s workforce over the period in question.
The discovery has hastened the departure of group managing director and chief executive Peter Birtles, who will now step down effective February 20, a month earlier than expected.
Mr Birtles said he deeply regretted the situation and stressed that the company was committed to remediation
“We are very disappointed that we have let these team members down and not met our standards, and we apologise to each person affected unreservedly,” he told the market on Tuesday.
“We identified this issue after initiating a thorough review of employment arrangements across our business, supported by external experts.”
Super Retail said the group-wide review was initiated last year following the discovery of a related breach for team members involved in Set Up projects, which resulted in about $8 million in underpayments.
After identifying the issue with retail managers, Deloitte was engaged to analyse 1.9 million shifts in total.
The company will engage an independent, external accountant to identify individual underpayments and will back pay these amounts plus 5.5 per cent interest a year – an $11 million pre tax hit.
Super Retail said the issues relating to overtime and allowance back payments were historic and would not materially affect the underlying financial drivers of the business.
The company expects to post a 6.0 per cent lift in first-half sales to $1.4 billion when it announces its results on Thursday, with first-half earnings before tax, depreciation and amortisation up 11.3 per cent on the same point last year to $166.2 million.
Super Retail shares were trading 0.19 per cent higher at $7.875 at 1530 AEDT, but still down from a two-year high of $10.00 in August.
Last month it was announced that Anthony Hegarty, the managing director of outdoor retailing, would replace the retiring Mr Birtles at the helm.