Dear Charnelle,
From what you have written, it merits feedback to you also.
Your subordinate spends some 3-4 hours of her duty in personal activities. How come you did not notice this? What Director could observe that why you could not observe? In some other company along with that junior, possibly you also would have ended up in getting warning for your poor supervision. Good to note that your Director has spared you.
Has the Director given sufficient powers to you? Is he the central authority where all the power is centralised leaving the cursory roles to all others? If there is devolution of powers then you can improve the performance of the stores.
Click here to read my reply on how to do the financial audit of the stores.
Secondly, everyday morning you may call your staffs and ask them how would they like to spend their day. In the evening track their performance. Of course, what I am recommending is "close supervision". But at this stage you need to do this.
Take this incident as warning signal to you also. What I have written is completely besides the point however, it is in your interest.
All the best!
Dinesh V Divekar