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Covid-19 subsidies rescue The Warehouse Group’s bottom line

Government subsidies to cover staff wages during the Covid-19 shutdowns saved The Warehouse Group from posting a loss during the year to August 2. 

The company ended the year with sales up just 1.5 per cent to $3.2 billion, according to preliminary, unaudited results. Reported sales were up by 3.3 per cent before an adjustment to reflect that the financial year just ended had an extra trading week. 

Group sales in the second half of $1.5 billion were flat after adjusting for the additional week.

The company reported a full-year, post-tax profit of $44.5 million, which was down 32 per cent on the prior year. But that included $67.8 million in wage subsidies and if removed, the company would have lost $4.3 million. 

“Given the loss prior to the wage subsidy, as well as the continued uncertainty around economic activity and trading outlook, the group directors have decided not to pay a dividend for FY20,” the company said in a stock-exchange filing. 

However, it said subject to trading over the critical second quarter period and any further restrictions on community movement or adverse economic impacts of Covid-19, the company hopes to resume dividend payments during the new 2021 fiscal year. 

The Warehouse Group ended the year with a net cash position of $168.1 million, however, as it returned towards “a more normal level of working capital,” the net cash balance has reduced to about $80 million.

Final audited results are scheduled to be released on October 15.

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