Fox forgoes furlough grants after dividend storm

Harel Wizel Photo: Eli Yizhar

Following fierce criticism of its decision to pay shareholders a NIS 49 million dividend, the Israeli fashion chain says it won't take government assistance.

Israeli retail fashion chain Fox Group (TASE: FOX) has announced that it will forgo government grants for taking back furloughed employees. In its financial statement for the first quarter of 2020, Fox estimated that government grants for taking back employees sent on unpaid leave during lockdown for the Covid-19 crisis could reach up to NIS 18 million. At the same time it controversially announced a NIS 49 million dividend for shareholders.

Minister of Finance Israel Katz was quick to condemn the fashion chain. He tweeted, "The decision by the Fox chain's owner to put a big dividend into his pocket, at this time, during a period of crisis and distress, when he and other employers received assistance for the justified goal of bringing employees back to work is infuriating and against the solidarity that is needed. I ask him to immediately cancel the decision."

But rather than cancel the dividend, Fox has decided to forgo the grants. Wizel said, "I spoke to Finance Minister Israel Katz this morning and informed him that following yesterday's announcement to the stock exchange and following the return of the Fox Group to activities, we see a substantial increase in activities and the company is relinquishing all grants from the government. Minister of Finance Israel Katz welcomed the decision."

Katz was one of the main proponents of providing grants for taking back furloughed workers, while Fox controlling shareholder Harel Wiesel led the campaign by the large retail chains for the grants by refusing to reopen stores at the end of lockdown. The step received major criticism because there was no compensation for companies that had avoided putting employees on unpaid leave. Many asked why Katz did not link the grants to restrictions such as not paying shareholder dividends.

Fox pointed out that more than 50% of its shares are held by the public and that the NIS 49 million dividend was for 2019 profits, which had been suspended in March due to the economic uncertainty at that time.

Published by Globes, Israel business news - en.globes.co.il - on June 26, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Harel Wizel Photo: Eli Yizhar
Harel Wizel Photo: Eli Yizhar
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