Super Retail Group, which bought New Zealand outdoor clothing and equipment company Macpac 12 months ago, reported a 6 percent increase in first-half sales and an almost 9 percent improvement in normalised net profit.

But the results were overshadowed by the announcement that the company will have to fork out almost A$43 million because of two staff-underpayment scandals uncovered during the past few months.

The first incident, last year, affected staff involved in setting up and refurbishing stores. The second – revealed Tuesday – involved underpaying overtime and meal allowances for retail managers.

“The company will be making provision for total costs of A$42.6 million pre-tax (A$30 million post-tax) for costs associated with compensating retail store managers for underpayments over a six-year period,” the company said today.

Long-standing SRG chief executive Peter Birtles has fallen on his sword and will leave next week – five weeks earlier than planned. He will be replaced by Anthony Heraghty, who was previously head of the company’s outdoor chains, including Macpac.

SRG recognised the A$30 million post-tax cost of the underpayments by adjusting its retained earnings by A$24 million. The remaining A$6 million compensatory interest bill was treated as a one-time cost.

That saw group net profit for the six months to Dec. 29 fall 0.7 percent to A$71.7 million. Excluding the underpayments and other one-time costs, normalised net profit rose to A$81.6 million.

Macpac more than pulled its weight in the period, adding A$9.5 million to group earnings before interest, tax, depreciation and amortisation, the company said.  

Macpac effectively joined SRG at the end of March 2018. The retail group also owns Supercheap Auto, Rebel Sport in Australia, and boating, camping and fishing chain BCF. The company said Macpac had contributed A$51.4 million in sales since April 1, and nine more Macpac stores had opened, taking the total to 59 in Australia and New Zealand.

Another nine stores, which make up Super Retail Group’s outdoor store chain Ray’s, will be rebranded Macpac during the next three months.

Macpac online sales grew 24 percent over the period, and now make up 10 percent of the total, the company said.

Macpac was founded in 1973 by 19-year-old Christchurch-based hiking enthusiast Bruce McIntyre, who started making backpacks in his parents’ garage.

Later, Jan Cameron and Bernie Wicht, founders of rivals Kathmandu, bought major stakes. In early 2016, 90 percent of Macpac was bought by Australian private equity firm Champ Ventures for approximately A$70. Champ put the business up for sale the following year.

Super Retail Group paid NZ$144 million for Macpac, and the purchase gave SRG the number one spot in terms of share of the outdoor clothing and camping equipment market, ahead of Kathmandu.

Nikki Mandow was Newsroom's business editor and the 2021 Voyager Media Awards Business Journalist of the Year @NikkiMandow.

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