The Star May Slash Approximately 500 Workplaces

The Star Entertainment Group, the leading entertainment and gambling company in Australia, released a new trading update, confirming the possibility to reduce its workforce. On Wednesday, the company revealed it plans to cancel its short-term and other incentives for FY23, while at the same time freezing salaries for non-EBA (enterprise bargaining agreement) employees.

What’s more worrying is that The Star confirmed it plans to reduce its workforce by cutting approximately 500 FTE (full-time equivalent) positions. Those actions, combined with a previously announced AU$40 million ($26.8 million) operational initiative, are expected to help reduce The Star’s operating expenditures by more than AU$100 million ($67.1 million).

At the same time, the company confirmed that the aforementioned changes are independent of the possible impact of a proposed casino duty rate increase for New South Wales (NSW). The Star also noted that it continues to collaborate with Barrenjoey Capital Partners about the “strategic review of The Star Sydney and consider any structural alternatives available to maximize value for the Group’s shareholders.”

“In response to this new operating environment, the Board and management have today announced the implementation of a range of initiatives to further reduce the operating cost base of the Group,“

reads a statement released by The Star

Layoffs Are the Result of Rapidly Deteriorating Operating Conditions

The Star explained that the actions come amid a rapid deterioration in the operating conditions. This, the company said, applies especially to The Star Gold Coast, as well as The Star Sydney. “This has largely been driven by the compounding impact of regulatory operating restrictions and exclusions, and by an emerging weakness in consumer discretionary spending behavior,” outlined The Star.

“The Group is experiencing a significant and rapid deterioration in operating conditions, particularly at The Star Sydney and The Star Gold Coast,“

added The Star

According to the company, its Sydney operations are still impacted by the regulatory operating restrictions. Additionally, The Star said that The Star Sydney operates in “an uneven competitive environment.” Acknowledging the significant challenges those conditions presented, the company has taken a decision to reduce operating costs and an effort to cushion the impact.

The recent trading update comes after back in February, The Star released its H1 FY23 results. At the time of the announcement, the company confirmed it saw a net loss for the period and hinted at plans for raising equity.