Rebel Sport owner Super Retail Group has apologised after an audit found it owes $32 million in overtime hours to about 10 per cent of its workforce.
The money represents six years’ worth of unpaid overtime and allowances owed to retail managers. Repaying it is expected to bring a $43 million pre-tax hit to the company’s first-half earnings.
Super Retail Group, which will post its audited half-year results on Thursday, said a comprehensive review of employment arrangements uncovered the six-year shortfall in overtime hours due under the General Retail Industry Award.
The company – which also owns Boating, Camping, Fishing and Ray’s Outdoor – will also recognise $11 million in compensatory interest
The discovery has hastened the departure of group managing director and chief executive Peter Birtles. He will 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 said 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. That resulted in about $8 million in underpayments.
After identifying the issue with retail managers, Deloitte was engaged to analyse a total of 1.9 million shifts.
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 per cent lift in first-half sales to $1.4 billion when it announces its results on Thursday. Its first-half earnings before tax, depreciation and amortisation will be up 11.3 per cent on the same point last year to $166.2 million.
Super Retail shares were trading 0.64 per cent higher at $7.91 at 11.15am (AEDT). They remained down on a two-year high of $10.00 in August.
Anthony Hegarty, the company’s managing director of outdoor retailing, will replace Mr Birtles at the helm.