The Warehouse Group has sent a letter to some of its staff asking them to take a pay cut of between 10 and 20 per cent as it grapples with a significant drop in earnings.
The NZX-listed retailer which operates retail chains The Warehouse, Warehouse Stationery, Torpedo7 and Noel Leeming has asked staff earning between $60,000 and $100,000 to take a 10 per cent pay cut and those earning anything above to take a 20 per cent cut effective from May 1.
There are concerns that those that do not agree to a pay cut will face the prospect of redundancy.
In an email to staff, the group said: "[The Warehouse Group] needs to take a number of steps to manage its cashflow so that we can preserve our business when we come out of lockdown. This includes managing the cost of our team members."
One month ago, almost to the day, The Warehouse said it would continue to pay its entire workforce their full salary throughout the lockdown.
A spokeswoman for The Warehouse Group told the Herald that the proposal did not mean that those that did not opt in would face redundancy, she said other options such as taking annual leave would be discussed as an alternative.
"If people don't agree to have a pay cut, then that will result in a conversation to discuss people's options, what the implications are on their individual circumstance; it doesn't necessarily mean redundancy at all, that's a potential option," the spokeswoman said.
The Warehouse Group has received $67 million in Government wage subsidies for its sum 11,000 staff, but the retail giant says there is still a $192m gap between its monthly labour costs and the wage subsidy.
It received $52m for its Warehouse and Warehouse Stationery chains, $12.2m for Noel Leeming, $3.2m for Torpedo7 and $400,000 for its e-commerce business TheMarket.
"There's a significant difference between the millions of dollars we've received for the Government subsidy and the costs of keeping everyone on full pay," the spokeswoman said.
"We have been mindful that those earning under $60,000 may find a cut very difficult and so we have made the call to pay all people below $60,000 full pay until the end of June regardless of whether they work," said Richard Parker, acting chief HR officer at the group.
The company said 88 per cent of its staff had already agreed to the pay reduction.
Warehouse chains have been selling essential items online throughout the lockdown, but the company says this has made up just 10 per cent of its regular pre-lockdown earnings.
"Over 90 per cent of [group] revenue comes from stores which have been closed. We have received a wage subsidy for team members but that only goes a portion of the way to their normal pay rates," Parker said.