The Warehouse boss Nick Grayston is defending the premature announcement on Tuesday that the Red Shed would stay open during the lockdown, which triggered a boost to its shares by as much as 42 per cent at one stage.
This morning he said it was made in good faith and based on legal advice, but he now supports the Government decision to shut it down during the lockdown period.
The Tuesday announcement from The Warehouse Group - which includes The Warehouse, Warehouse Stationery, Noel Leeming, Torpedo7, 1-day and TheMarket - sent the retail sector into a spin - with claims of an unfair playing field.
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Retail NZ chief executive Greg Harford told the Herald the group's announcement was contrary to guidance it had received from the Government.
"It doesn't accord with the advice that I have seen coming out of Government," Harford said, adding that he was not aware of any provisions that had been granted for the company to continue to trade during that period.
The Warehouse Group could face a fine of up to $500,000 if it's found to have breached NZX continuous disclosure rules in relation to the Covid-19 lockdown.
Grayston said he had been in touch with the Government "for some time" and the announcement was made in good faith, based on information from "credible sources".
"And on our strong belief, supported by legal advice, that Red Sheds met the criteria of being an essential service, based on the Government definition of 'any entity involved in the supply, delivery, distribution and sale of food, beverage and other key consumer goods essential for maintaining the wellbeing of people'.
"With the information we had to hand we understood that our significant grocery,
toiletries, cleaning, warmth essentials for winter needs and our national coverage meant that we were expected to trade."
He said at the time the group's 12,000 staff "were understandably very keen to receive definitive answers around our status as a business".
But the group put a trading halt in place after discussions with the Government later that day.
On Tuesday night, the Government announced that The Warehouse was not an essential service and had to close, following a strong hint from Prime Minister Jacinda Ardern that people should not expect to be able to visit their local Red Shed during lockdown.
In a statement this morning, Grayston said he completely supported "the need to do everything possible to keep all New Zealanders safe".
A group spokesman said yesterday that the 12,000 staff would continue to be paid for the full four-week lockdown.
The Warehouse will now cancel the payment of its dividend of 10 cents per share for the first half of the year, which was due to be paid out on April 17.