Primark repays furlough aid as shoppers flock back
PRIMARK today pleased the City with a return to dividend payments as it set out plans to recover £3 billion in sales lost due to the pandemic, with shoppers flocking back in record numbers.
Parent group ABF will repay £121 million to the government in furlough cash, putting pressure on rival retailers still holding out — such as John Lewis — to do the same.
The company revealed that 30 staff have lost their lives to the virus.
“We mourn them all,” said CEO George Weston.
Footfall in stores is now back to pre-pandemic levels, a week after the end of lockdown, with optimistic shoppers grabbing lingerie, make-up, handbags and shoes.
Last week saw record sales, with queues forming outside some stores before they opened at 7am.
Finance director John Bason senses a shift in the public mood compared with previous restarts of the economy.
“Last time it was slippers and pyjamas,” he told the Standard. The Oxford Street store is “almost normal” in terms of sales.
The return of foreign holidays would help boost sales of beachwear and other holiday items he said. Primark is a rare UK retail success story overseas, recently turning profitable in the US and planning to expand across Europe.
Overall, profits at the group fell 8% to £275 million in the half-year. Furlough allowed it to retain all 65,000 jobs. Revenue across the company fell 17% to £6.3 billion.
The store closures will lead to another £700 million of lost sales over the next six months, though nearly 70% of retail space will be open by the end of April.
A dividend of 6.2p is a third of what it was previously, but removes a City question mark over the company.
Shares slipped 50p to 2410p today but are up from 1650p last October.
Primark remains under fire for its refusal to sell online, a mistake the pandemic highlighted say critics.
“Covid has hit certain sectors incredibly hard, Primark happens to be a high street retailer,” said Bason. “This has been hugely painful. But I don’t wish we were a different business.”
Chris Beckett at Quilter Cheviot said: “It is pleasing to have confirmation that Primark stores generated record sales in the first week after reopening, showing strong pent-up demand from consumers for value-for-money clothing.
“One week cannot demonstrate a trend, but the desire of consumers to go shopping in Primark stores is evidence that not everything has changed during the pandemic.”
Susannah Streeter, analyst at Hargreaves Lansdown, said: “Without an online crutch to lean on it’s been a harsh environment during lockdowns... but Primark is back in the game.
“The group assumes that although profits will be lower this year, it will return to cash generation, so it’s paying back furlough scheme money and the dividend is back, demonstrating the group’s overall optimism.’’