The Warehouse Group says it acted in “good faith” when it told the NZX on Tuesday that its Red Shed Warehouse stores would remain open during the four-week lockdown.
In a statement released to the NZX this morning, Nick Grayston, chief executive of the group, said: “With the information we had to hand we understood that our significant grocery, toiletries, cleaning, warmth essentials for winter needs and our national coverage meant that we were expected to trade.”
Grayston said the company later found out that it did not fall under the Government’s definition of an essential service.
“When we confirmed The Warehouse (Red Sheds) would be open, we did so in good faith on the basis of the information we had been given from credible sources, and our strong belief, supported by legal advice, that Red Sheds met the criteria of being an essential service,” he said.
The company’s shares did not trade yesterday after it was placed into a trading halt on Tuesday afternoon. Its shares were up by as much as 42 per cent at one stage following the announcement on Tuesday morning.
The Warehouse will now cancel the payment of its dividend of 10 cents per share for the first half of the year, which was due to be paid out on April 17.
“Considering the circumstances and uncertainty around the impact of Covid-19, the board of the group has decided that it is in the best interest of the company to cancel the interim dividend,” the company said in a statement.
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On Tuesday, following the company’s announcement to the stock exchange, Paul Stocks, deputy chief executive of MBIE, told media during a press conference that the Government had not provided The Warehouse with an exemption of trade to operate during its mandatory lockdown to control the spread of Covid-19.
The group could now face a fine of up to $500,000 for the hasty market announcement if it is found to have breached the NZX’s continuous disclosure rules.
The Warehouse reported an almost 20 per cent drop in its first-half net profit to $29.2 million. Excluding ongoing internal transformation costs, the underlying result was up 16.7 per cent in the 26 weeks to January 31. It is unsure how the outbreak will affect trade in the remaining six months of the 2020 financial year.
