Primark owner to repay furlough cash and reopen its 20 Scottish stores on Monday
Primark’s owner will repay £121 million in furlough money claimed under government job retention schemes and pay out a dividend to shareholders after confirming that its 20 Scottish stores should reopen on Monday.
Parent company Associated British Foods (ABF) said the decision to repay the money comes despite stores remaining closed for most of the autumn and winter period, leading to revenues and profits plunging.
Sales were down 17 per cent to £6.3 billion and adjusted operating profits fell 50 per cent to £319 million in the six months to February 27.
Chief executive George Weston said the repayments would be made as he was confident stores will become cash generative following the easing of lockdown restrictions.
He said: “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 April 12.
“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 firm added: At the time of our last trading update on February 25 we were trading from 77 stores representing 22 per cent of our retail selling space.
“Our stores in England and Wales reopened on April 12, which we expect to be followed by our 20 stores in Scotland on April 26, following the roadmap laid out by the UK authorities at the end of February.”
John Bason, finance chief of ABF, noted: “What is striking this time is, fashion is back... It feels like people are thinking more about what they're going to wear when they go out with friends or go out to dinner and all those social occasions.”
On the furlough scheme, Weston said the company claimed £98m during the previous financial year to support Primark’s 65,000 workforce.
“A further £79m was claimed in the six months to February 27 and up until today the amount is now £121m,” the company said.
Chairman Michael McLintock added: “Although uncertainty remains, a large proportion of the UK adult population has now been vaccinated and last week we saw the successful reopening of Primark’s English and Welsh stores which represent some 40 per cent of our total retail selling space.
“On the assumption that our English and Welsh stores remain open, Primark will return to cash generation.
“Accordingly, we do not plan to make any further claims from government job retention schemes for which we would be eligible from this date, and we intend to repay the £121m referred to above. This includes the repayment of £72m to the UK government.”
A dividend of 6.2p a share was declared, worth £49m, having scrapped any dividend payments last year.
The company, which also has grocery, sugar, agriculture and ingredients businesses, said it expects to be trading from 68 per cent of selling space by the end of April.
Richard Hunter, head of markets at Interactive Investor, said: “AB Foods has again displayed the benefits of not having all of its eggs in one basket. While Primark has been largely hamstrung by the pandemic, other parts of the business have seen the benefit of eating and baking at home.”