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Woolworths underpayment hits pub and liquor store staff, virus to hit annual profit

* Woolworths says underpayment probe extends to pubs, liquor arm

* Underpayment bill now expected to be A$390 mln vs A$315 mln

* 2020 profit forecast A$3.2 bln-A$3.25 bln vs A$3.29 bln prior (Adds union quote with no other changes)

By Byron Kaye and Shashwat Awasthi

SYDNEY/BENGALURU, June 23 (Reuters) – Top Australian grocer Woolworths Group Ltd revealed on Tuesday it had underpaid staff at its pubs and liquor stores division and forecast a decline in annual profit as a COVID-19 shutdown hammered non-supermarket sales.

The embarrassing admission from one of the country’s best-known companies follows revelations last year that it had underpaid staff at its supermarkets, and follows similar confessions recently from other giants of corporate Australia.

Woolworths CEO Brad Banducci attributed the underpayments to the complexity of wage regulations, telling analysts on a call it would be an “issue for every major corporate in Australia”.

It is the second time this year the Sydney-based employer of 115,000 people has upped its expected reimbursement bill.

Woolworths said it now expected to pay A$390 million ($269.80 million) in staff backpay, up from the A$315 million figure it gave months ago.

Underpayment scandals have also hit Woolworths’ supermarket rival Coles Group Ltd, Commonwealth Bank of Australia and Qantas Airlines Ltd in the past year.

“Too many companies in the retail sector are paying the price for a failure to update their payroll systems with 21st-century technology,” said Gerard Dwyer, national secretary of the Shop, Distributive and Allied Employees Association, the union for most Woolworths staff.

Woolworths said Australian grocery sales had remained elevated in the June quarter so far, up 8.6% on the same period a year earlier, although that was off the 11.3% spike in the March quarter when coronavirus lockdowns sparked panic buying.

Overall sales were affected by shutdowns of more than 300 pubs run by its ALH division, which the company expected to produce less than half the annual pre-tax profit of the previous year.

Annual operating profit for Woolworths would likely come in between A$3.20 billion and A$3.25 billion, compared to the previous year’s A$3.29 billion, it said.

Woolworths shares were down 0.7% in a flat overall market by midsession. ($1 = 1.4455 Australian dollars) (Reporting by Byron Kaye in Sydney and Shashwat Awasthi in Bengaluru; Editing by Muralikumar Anantharaman and Stephen Coates)

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