Target owned by Wesfarmers has seen the exit of three executives, including managing director Stuart Machin, with Wesfarmers CEO Richard Goyder describing the supplier arrangements that artificially boosted the company’s earnings as “mind-blowingly stupid”.
Under the scheme, rebates were arranged with 31 overseas suppliers for the first half of the 2016 financial year under the promise that Target would then pay them higher prices in the second half.
Target reported before-tax earnings of $70 million (2013) went up to $74 million, up 5.7 per cent (2014)
BUT its EBIT (Earnings Before Interest and Tax) based on the $74 million, should have been $53 million BUT WAS down $21 million in income due to the rebate arrangements making the “payments” for in the next period.