Wesfarmers admits to underpaying Target employees

19 February 2020, Written by David Simmons

Wesfarmers admits to underpaying Target employees

Yet another Australian retailer has underpaid its staff with Wesfarmers confessing today that employees at Target lost out on $9 million.

The revelation came alongside the group's 1H20 financial results, wherein the company reported a NPAT of $1.2 billion, up 5.7 per cent from 1H19.

The payroll errors were identified as part of an extensive review conducted by Wesfarmers of its pay systems and processes.

"Immediate steps are being taken to rectified identified issues, notify and repay affected team members, including interest, and ensure accuracy in the future through a robust program of auditing and monitoring," says Wesfarmers managing director Rob Scott (pictured).

The company also admitted to underpaying employees in its Industrial business by $15 million, which includes companies like WesCEF, Blackwoods and Workwear Group.

Wesfarmers' disclosures are the latest in a string of corporate retailers coming clean about staff underpayments.

Just yesterday Coles admitted to underpaying a small percentage of staff by around $15 million. The supermarket has set aside cash to remediate employees with interest.

Australia's largest retailer Woolworths similarly came under fire last year for underpaying staff by an estimated $300 million.

This revelation resulted in the group's CEO and chair slashing their own pay packet and encouraged law firm Adero Law to launch a class action lawsuit against Woolworths.

Wesfarmers results "pleasing"

Overall, Wesfarmers posted solid 1H20 results backed by strong performance in its largest businesses Bunnings and Kmart.

"Bunnings, Kmart and Officeworks delivered a pleasing trading performance, with sales growth increasing relative to the prior corresponding period," says Scott.

"Strict working capital management and disciplined capital expenditure also resulted in strong cash flow generation across the Group's operating divisions."

Investment in digital paid off for Wesfarmers who saw 35 per cent growth in its e-commerce arm during the half.

"The enhancements in digital capability continue to complement existing store networks with sales density improving the Group's retail divisions," says Scott.

The Wesfarmers results come hot on the heels of the group's announcement that it is cashing in on the rise of supermarket Coles (ASX: COL) since the group's demerger in late 2018.

The company is selling 4.95 per cent of issued shares in Coles, which at the time of announcement was worth around $1.1 billion.

Wesfarmers will retain a 10.1 per cent holding in the chain post-sale.

Shares in Wesfarmers are up 2.61 per cent to $46.43 per share at 10.24am AEDT.

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Author: David Simmons

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