Primark to reimburse £ 121million in leave after ‘record sales’ since reopening this month
Primark owner to return £ 121million in leave money claimed under government job retention programs after the retailer saw a week of ‘record sales’ after the street reopened main.
Associated British Foods (ABF) said the move comes despite stores being closed for most of last year, causing both revenues and profits to fall.
Sales fell 17% to £ 6.3bn and adjusted operating profit fell 50% to £ 319m in the six months ending February 27.
The retailer, however, posted record sales this week with queues winding along main streets after non-essential stores were allowed to reopen on Monday.
John Bason, Chief Financial Officer of ABF, said: “Many individual stores have broken their own sales records. We were all excited as Christmas approached last year, but we are beating the Christmas weeks.
“This is our emergence from the third lockdown.
“ What is striking this time is that the fashion is back … It feels like people think more about what to wear when they go out with friends or go to dinner and all these social occasions. ”
The owner of Primark, Associated British Foods, said the move to return £ 121million in leave money was due to confidence in a recovery in sales as restrictions on retailing eased across Great Britain.
ABF chief executive George Weston said holiday refunds would be made as he was confident stores would become cash generators following the easing of restrictions in England and Wales, where 40% is located of the Primark retail space.
He said: ‘We are delighted to welcome customers back to our stores as lockdowns ease and we are delighted with record sales in England and Wales in the week following the reopening on April 12.
“With our success in a number of new markets, as large as Poland and Florida, we are as confident as we have ever been of Primark’s long-term growth prospects.
Regarding the leave program, he said the company had claimed £ 98million in the previous fiscal year to support Primark’s 65,000 employees.
‘A further £ 79million has been claimed in the six months leading up to February 27 and so far the amount is now £ 121million,’ the company said.
Primark is one of more than 125,000 employers who voluntarily returned leave money that was used to cover 80 percent of workers’ wages.
According to figures from HMRC, this represents £ 700million of the total of £ 57bn claimed under the scheme as of March 15.
Managing Director George Weston said the refunds would be made as he was confident the stores would become cash generators following the easing of restrictions in England and Wales.
Companies such as the Ikea furniture store, home builders Barratt and Taylor Wimpey and contractor Serco are among those that have returned the leave.
Halfords, which has remained open as a ‘essential retailer’, said it would reimburse £ 10.7million after seeing ‘stronger than expected’ sales.
President Michael McLintock added: ‘Although uncertainty remains, a large part of the UK adult population has now been vaccinated and last week we witnessed the successful reopening of the English and Welsh Primark stores, which represent approximately 40% of our total retail space.
“Assuming our English and Welsh stores remain open, Primark will revert to cash generation.
‘As a result, we do not plan to make any further claims to government job retention programs for which we would be eligible from that date, and we intend to repay the £ 121million mentioned above. This includes the repayment of £ 72million to the UK government ”.
Last year, Primark rejected a government retention bonus of £ 30million for returning staff on leave to work.
Under a scheme set up by Chancellor Rishi Sunak, companies are getting £ 1,000 for every worker they bring back to work, even if the business is already up and running after the coronavirus lockdown.
A spokesperson for parent group ABF said: “The company has withdrawn its employees from government employment assistance programs in the UK and Europe, in line with the reopening of the majority of its stores.
Primark saw ‘record’ sales in England and Wales in the first week of reduced lockdown restrictions allowing stores to reopen, the company said. Pictured: Customers line up to enter a reopened Primark in Liverpool
“The company believes that it should therefore not be necessary to request payment under the bonus system under the current circumstances.”
John Lewis, who laid off 14,000 workers during the lockdown, has since followed suit, declining a £ 14million grant.
Primark also declared a dividend of 6.2 per share, worth £ 49million, after removing all dividend payments last year.
The company said it plans to trade 68% of the retail space by the end of April.
Earlier this year he appeared around 850 retail jobs have been lost every working day since the start of the year.
Analysis by the Center for Retail Research (CRR) in February showed that 27,096 jobs have been cut and 1,023 stores have been slated for closure so far in 2021.
The research, which covers insolvencies of retailers with 10 or more stores, highlights the turmoil on Main Street, which has seen the recent collapses of Debenhams and Sir Philip Green’s Arcadia group, which owned Topshop and Dorothy Perkins.
Some companies that have closed stores this year so far include high-end stationery chain Paperchase which announced the closure of 37 stores and the loss of 500 jobs in early January.