Primark to return £121m in furlough cash as reopening sparks 'record sales'

Primark to return £121m in furlough cash as reopening sparks ‘record sales’

Apr 20, 2021

The owner of Primark has revealed it is to return £121m of furlough money to taxpayers while reporting “record” sales for the fashion chain as stores reopen following coronavirus lockdowns.

Associated British Foods (ABF) used its half-year results, which showed a halving of profits, to announce the repayment.

The company said it was returning money from job retention schemes during the COVID-19 crisis to date, including £72m to the UK government, as it also revealed a payout to shareholders despite the hit to the business from store-only Primark’s enforced closure during lockdowns.

ABF has repeatedly ruled out trading the chain online.

The group, which also owns major sugar, grocery, agriculture and ingredients businesses, said it made adjusted profit before tax of £319m during the six months to 27th February.

That was down from £636m in the same period last year.

Group revenue fell 17% to £6.3bn – blamed on the trading restrictions placed on Primark which recorded a 90% slump in operating profits to £43m.

Primark was able to reopen in England and Wales last week – accounting for 40% of its selling space – to record demand with large queues witnessed in many towns and cities as customers hunted summer fashion after a miserable winter.

ABF chief executive George Weston said the furlough repayments, which protected up to 65,000 jobs across Primark’s global estate, would be made as stores became cash generative again.

He told investors: “We are excited about welcoming customers back into our stores as the lockdowns ease and are delighted with record sales in England and Wales in the week after reopening on 12 April.

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“With our success in a number of new markets, as wide-ranging as Poland and Florida, we are as convinced as we have ever been in the long-term growth prospects for Primark.”

The company said it expected to be trading from 68% of Primark selling space by the end of April.

Shareholders, who got no awards last year, secured an interim dividend of 6.2p a share worth £49m.

But shares fell 3% at the open.

Chris Beckett, head of equity research at Quilter Cheviot, said of the results: “Primark was clearly going to be a big beneficiary from the economic re-opening after a £3bn hit to sales experienced during the pandemic.

“But while we saw pictures of queues outside many stores last week, it is pleasing to have confirmation that Primark stores generated record sales in England and Wales, some 40% of their total global selling space, in the first week after reopening, showing strong pent-up demand from consumers for value-for-money clothing.”

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