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After nearly doubling first-half profits thanks to a shift in consumer spending habits, furniture retailer Nick Scali (ASX: NCK) has decided to pay back $3.6 million of JobKeeper wage subsidies to the Federal Government.
The retailer is the latest company to refund JobKeeper payments - following in the footsteps of Domino's Pizza Enterprises (ASX: DMP), Super Retail Group (ASX: SUL), and car manufacturer Toyota.
Nick Scali says it has been appreciative of the Federal Government's wage subsidy policy "which was highly successful and of great assistance at the height of the pandemic enabling the company to provide security of employment during a particularly uncertain time."
"Further, the JobKeeper scheme enabled the company to continue to pay employees throughout the State Government-mandated closures in Melbourne throughout August, September and October, and continue to pay employees in full during other temporary COVID-related store closures in South Australia and Western Australia as recently as last week," says Nick Scali.
"However, as highlighted in last week's announcement, the company fully recognises that it has benefitted from the increased consumer confidence this program has created, which resulted in record sales and net profit after tax."
The company's 1H FY21 results were partly buoyed by JobKeeper payments, and saw the company nearly double profits to $40.6 million, almost matching its FY20 full-year result of $42.07 million.
Nick Scali reported written sales orders of $191.1 million, an increase of 52 per cent on the previous year, with the order book hitting a record high by the end of December.
JobKeeper and rent concessions bolstered the company's bottom line by $4 million, supporting a $5.55 million fall in operating expenses.
The result was also achieved despite the company closing 11 stores in Melbourne for three months during the half-year.
The company's strong results, which included the contribution of $3.6 million of JobKeeper payments, attracted the ire of politicians.
Federal Labor MP Andrew Leigh called upon the retailer to pay back its JobKeeper wage subsidies in light of the bumper profit.
"JobKeeper recipient Nick Scali's made a $40 million profit in the second half of 2020, almost double its profit in 2019," Leigh said on Twitter.
"Of its $32 million interim dividend, $4 million will go to the Scali family.
"It's time Nick Scali paid back $3.5 million in JobKeeper that it clearly didn't need."
The company also announced it was paying an interim dividend of 40c per share to shareholders following its strong 1H FY21 results.
Shares in NCK are up 4.3 per cent to $11.85 per share at 10.07am AEDT.
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