Primark furloughs 68,000 staff as it goes from £650million sales a month to £0
PRIMARK has been forced to furlough 68,000 workers across Europe, as the budget fashion chain revealed its monthly sales have dropped from £650million to zero.
Without support from furlough schemes across several European countries, these employees would have likely been made redundant, parent company Associated British Foods (ABF) admitted today.
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It comes after the coronavirus epidemic caused Primark to temporarily close 376 stores across Europe, including 189 branches in the UK.
Because it has no online operation, monthly sales from the clothing retailer have plunged from £650million to zero.
Parent group ABF said it had taken a £284million hit from writing down the value of Primark stock it can no longer sell at present.
But finance boss John Bason added that the firm was "clearing the decks" so it could emerge stronger from the crisis.
Shops allowed to stay open
ONLY a small group of retailers have been allowed to stay open during the coronavirus crisis.
They include:
- Supermarkets
- Pharmacies
- Takeaways and food deliveries
- Health shops
- Medical services - eg, dentists
- Vets
- Newsagents
- Pet shops
- Hardware stores
- Retail shops in hospitals
- Petrol stations
- Bicycle shops
- Laundrettes and dry cleaners
- Undertakers
- Banks, building socities
- Short-term loan providers, credit unions and cash points
- Storage and distribtion centres
- Post Offices
- Car rental services and car parks near vital services such as supermarkets
- Public toilets
- Car garages and repair shops
- Food banks and shelters
He pledged: "We will come back stronger.”
Pre-tax profits at ABF slumped 41 per cent to £298million for the 24 weeks to February 29 due to the write off from the excess inventory.
ABF said: “We have carefully reviewed stock on hand and, to reflect an expected lower net realisable value on some of this inventory when our stores reopen, we have made a £284million provision.”
ABF boss George Weston said the group had been put “squarely in the path of this pandemic”.
Despite the huge drop in sales, Mr Weston said he won’t reopen Primark stores until it is safe to do so.
He also confirmed the company wouldn't start selling online in a bid to shift stock.
He told PA: "We will sell that stock in stores but it might take a while.
"It might be in a year's time but it's not going to deteriorate and we will just have to wait until we can open stores again safely.
"I think this is the cost of Covid rather than not having online operations."
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In an attempt to conserve cash, ABF has scrapped its interim dividend, while executive directors have taken a 50 per cent temporary pay cut and non-executive directors a 25 per cent cut.
ABF also owns food brands including Twinings tea, Blue Dragon sauces and Ovaltine.
Primark revealed on Monday it had agreed to pay an additional £370 million to suppliers to cover stock currently in production or yet to be delivered.
The fashion chain said the deal will cover products which were in production or due for shipment by April 17.
It had previously committed to pay for orders which were in transit or booked for delivery by March 18.
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