Coles Group has announced that an internal review has revealed around 5% of its liquor store managers were underpaid over the past six years.
The admission accompanied the release of Coles' HY20 results, which include a $20 million provision for wage underpayments in food and liquor.
Overall, Coles found about 1% of staff were underpaid over the past six years, due to differences between their remuneration and the General Retail Industry Award (GRIA).
In supermarkets, a $15 million back payment was flagged, along with $5 million in interest and additional costs.
In liquor, provision for estimated salary related payments, interest and on costs was $4 million.
“The review of our award covered salaried team members in our liquor business is nearing completion," the company said.
"We aim to make Coles a great place to work, and apologise to those team members who have been unintentionally affected," CEO Steve Cain added.
“We are working at pace with a team of external experts to finalise our review. Once completed we will contact all affected team members, both current and former, to remediate any identified differences in full.
“Coles has implemented steps to improve our systems and processes.”
Last year, Woolworths was found to have underpaid its staff by up to $300 million over the last nine years, affecting 5700 workers.
Liquor sales growth slows
Slower sales growth in liquor, range changes and restructuring of its hotel business has contributed to Coles' net profit falling 33.7% to $489 million in HY20.
Sales revenue in liquor was up 3.3% vs the prior corresponding period, to $1.7billion. However, EBIT was impacted by clearance and promotional activity following the commencement of tailored range change.
Coles Group flagged the issue in a trading update earlier this month, noting: “Despite a satisfactory outcome on sales, Liquor EBIT in the first half of FY20 was down on the prior corresponding period as a result of margin pressure and was impacted by clearance and promotional activity following the commencement of strategic range reviews.”
The company added today that the impact would continue to be felt in the second half.
"In Liquor, it is expected that earnings will remain under pressure in the second half as a result of tailored range reviews and clearance activity which commenced in the first half," it said.
"The bushfires have also had an impact on volumes in Q3.
"The new leadership team, under Darren Blackhurst who joined in January 2020, is undertaking a review of operations and an update will be provided at the full-year results announcement."
Blackhurst has more than 25 years’ experience in international retailing and has managed the liquor space at Morrisons, ASDA and Tesco.
Coles said the tailored range change initiated in liquor was designed to provide "a more relevant customer offer".
Exclusive liquor brand sales continued to grow, particularly in the wine category. Overall, 55 new exclusive brand lines were added in liquor, including the James Busby range and Somma, Australia's first alcoholic mineral water.
Online sales were up 28.2%.
Coles CEO Steven Cain also blamed poor weather conditions and bushfires over the summer for the drop in liquor sales.
"People were eating out less during the bushfire period," he said. "They were spending more at supermarkets, but they appeared, certainly in January, to be spending less on alcohol out in the garden over the BBQ."
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