BillionaireKeeper. It summed up the widespread outrage on social media yesterday after Solomon Lew revealed a record profit forecast, thanks largely to government support during the pandemic shutdown.
That would be the same JobKeeper program on which Treasurer Josh Frydenberg sought Lew’s advice.
But that’s not all that helped Lew’s numbers. Refusing to pay rent to his landlords and delaying payments to his suppliers were other key factors.
In a trading update on Thursday, Lew’s Premier Investments said it expected full year earnings before interest and tax (EBIT) to be up 11% to $185 million.
Sign up for a FREE 21-day trial and get Crikey straight to your inbox
This comes despite an 18% decline in sales in the second half of the financial year after it shut stores for two months during lockdown.
Even though sales soon bounced back strongly online, it was the 70% drop in the first six weeks of the second quarter that allowed him to access the government’s JobKeeper program for the bulk of his workers, and continues to save him millions in wages.
Lew was in a good position to understand the package — which has been criticised as hastily designed — given he was one of the key business figures with whom the treasurer consulted days before announcing it.
Frydenberg even told the ABC of how Lew was “in tears” as he spoke with him.
The company stated in the results that it had “maximised” the use of the various subsidy schemes along with rent relief. Although it didn’t give a specific figure, estimates have put JobKeeper claims in the tens of millions of dollars.
It should be remembered that JobKeeper was rushed out at the beginning of the crisis with the aim of keeping millions of workers off the unemployment lines and help struggling businesses stay afloat. Despite obvious design flaws it has largely worked and the government has been commended for that.
However concerns have been raised about it becoming DivdendKeeper, as Stephen Mayne warned on Wednesday of the Premier case.
One assumes it was not designed to use taxpayer funds to enrich billionaires, especially companies like Premier which had boasted before the pandemic of having $200 million in cash on hand.
Even Premier’s own investors, who will presumably reap the dividends of the record profit, can see the issue.
According to the Nine newspapers, Angus Gluskie, managing director at Premier shareholder White Funds Management, said “while the significant stimulus received by Premier was a short-term win for the business and its shareholders,” he questioned if “that was the intention of the JobKeeper program.”
Despite the fawning of many in the financial press this morning about Lew’s “toughness” and “lessons on winning in a crisis”, it was more about screwing everyone — from the taxpayers to landlords to the suppliers.
That was the term used back in March soon after he had stood down his 9000 workers and stopped paying rent, and then it was revealed he had also blown out payment times to suppliers from 30 days to six months.
“They’re telling us it’s 180 days, and then they brag about how cashed up they are after they’ve screwed everyone: their landlords, their suppliers, and their staff,” one supplier told the SMH, not wanting to be identified for fear of retribution.
Lew’s bitter fight with his landlords has been ongoing for years — yet he used the cover of the pandemic to quickly announce he was simply not paying rent for the duration. The damaging flow-on effect to other landlords and business confidence in general caused anger within the broader business community.
As I mentioned in my Crikey column back in April: who would have thought the decline of capitalism would be symbolised by billionaire landlords battling billionaire retailers?
Solomon Lew has become the ugly face of socialised capitalism.