The Warehouse has reported a $44.5 million bottom line profit in the 12 weeks to August 2 - although it would have made a $4.3m loss if it wasn't for the wage subsidy.
While the reported profit was down 32 per cent on last year, the group has come under fire for pushing through a restructuring plan to reduce its workforce in the months after the strict level 4 lockdown in response to Covid-19.
Net profit, adjusted for unusual items of $36.3m was $80.7m, up 9 per cent on last year. The company did not disclose what those unusual items related to in its preliminary announcement.
The Warehouse received almost $68m in wage subsidies. Across its brands, The Warehouse and Warehouse Stationery chains received $52m, Noel Leeming $12.2m, Torpedo7 $3.2m and TheMarket $400,000.
The company may have disappointed the market by deciding not to pay a dividend, despite it having a net cash position of $168.1m. The stock fell 5.45 per cent to $2.08 on the news.
A spokeswoman for the group said the board met and made the decision not to pay a dividend today and, as per NZX continuous disclosure rules, needed to update the market as soon as possible. The company will post its audited full-year results next Thursday, complete with financial statements.
The group has been subject to unfavourable remarks by Prime Minister Jacinda Ardern since it announced it would cut up to 1000 jobs in June. It has since revised this and says it job cuts would only affect 750 jobs, the equivalent of 320 fulltime jobs.
Chris Wilkinson, managing director of First Retail Group, said the group's move to lay off hundreds of staff after accessing the wage subsidy was within the rules as the redundancies and its restructuring proposals had been in the works before the onset of Covid-19.
The Warehouse has been undergoing restructures on and off for the past few years.
Wilkinson said The Warehouse would have been in a much worse financial position and would have made much larger cuts, and much earlier, to its workforce without the wage subsidy.
"The reality is it has been such a turbulent time for these sectors. There are no benchmarks to work on," Wilkinson said.
"The wage subsidy would have at least maintained a degree of confidence for staff and it meant that they had more time to consider a more strategic approach to realigning numbers as opposed to be reactive."
Wilkinson said the group had been reviewing its store and staff numbers and looking to consolidate its sites, including merging some of its Warehouse and Warehouse Stationery stores, for some time.
"They were reassessing their whole portfolio in light of continued changes that were essentially being driven by the likes of Amazon, and wanting to move more [transactions] online with things like TheMarket."
The group's decision not to pay out a dividend was "prudent" and reflected significant uncertainty about the trading environment ahead, he said. "We really don't know what spending will be like in the future - [retail] will be a very dynamic space in the next year or so.
"There's a likelihood that we are going to see further redundancies which will impact people's purchasing abilities and there will be challenges in terms of supply chain."
Wilkinson said the group had done all it could to retain as much of its workforce and its financial position during the nationwide lockdown in April.
"They made strenuous efforts to be recognised as an essential business. I think they did all things practical to get as good as they have got."
He said he believed the group had been unfairly used as an example by the Prime Minister.
In June, Ardern said she was "angry" with the group about its job cut plans, and just last week called its decision on this immoral.
"[The Warehouse] is a massive employer across New Zealand, it employs people in provincial towns, our cities, they've been active in training and reskilling people, and they were an easy target I think," Wilkinson said.
Wilkinson believed the group would likely continue to rationalise its portfolio through integrating more Warehouse and Warehouse Stationery stores.
Workers await their fate
Tali Williams, First Union secretary of retail, finance and commerce, still questioned whether The Warehouse had acted in good faith after it accessed the wage subsidy.
"The wage subsidy was put there by the government to keep New Zealanders in work and The Warehouse took that money and proceeded to run a restructure which has seen the decimation of people's hours of work and jobs."
Williams said the union would know next week how many jobs in total had been lost, and she expected it would be far greater than the 1000 it had initially floated.
"It remains to be seen how deep the damage is.
"I've spoken to many of these workers over the past few weeks and people are devastated."