Woolworths says it underpaid more staff, costs to hit annual profit

FILE PHOTO: People walk past a Woolworths supermarket following the easing of restrictions implemented to curb the spread of the coronavirus disease (COVID-19) in Sydney, Australia, June 16, 2020. Picture taken June 16, 2020. REUTERS/Loren Elliott/File Photo

(Reuters) - Woolworths Group Ltd WOW.AX said on Tuesday it had underpaid employees at its pub and hotels group ALH Hotels, deepening a wage scandal that has affected some of Australia's biggest companies.

The disclosure comes months after the grocery giant admitted to historically underpaying thousands of supermarket workers as much as A$300 million ($207.7 million), while several other conglomerates including rival Coles COL.AX and Wesfarmers WES.AX have also been embroiled in pay issues.

Woolworths said it now expected total remediation costs for underpayment of staff across the group, including salaried ALH staff who were underpaid in 2018 and 2019, to be about A$390 million.

This would eat into full-year operating profit forecast to be between A$3.20 billion and A$3.25 billion, marginally lower than last year.

“The group remains committed to fully rectifying any payment shortfalls across all group businesses as quickly as possible,” Chief Executive Brad Banducci said in a statement.

The company would also incur up to A$176 million in costs to streamline its supply chain by building two new distribution centres, and a further A$230 million related to the planned combination and spin-off of its drinks and pubs units.

Operating profit at its hotels unit was expected to more than halve to between A$160 million and A$170 million, due to restrictions imposed to curb the spread of the coronavirus outbreak, it said.

Reporting by Shashwat Awasthi in Bengaluru; Editing by Muralikumar Anantharaman and Stephen Coates