Primark will repay £121m in furlough cash after ‘record sales’ since reopening this month 

Primark’s owner will hand back £121 million in furlough money claimed under government job retention schemes after the retailer saw a week of ‘record sales’ following the reopening of the high street.

Associated British Foods (ABF) said the decision 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.

The retailer however saw record-breaking sales this week with queues snaking out along high streets after non-essential stores were allowed to reopen on Monday.  

Chief executive George Weston said the repayments would be made as he was confident stores will become cash generative following the easing of restrictions in England and Wales, where 40 per cent of Primark selling space is located.

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 12 April.

‘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.’

On the furlough scheme, he said the company claimed £98 million during the previous financial year to support Primark’s 65,000 workforce.

‘A further £79 million was claimed in the six months to February 27 and up until today the amount is now £121 million,’ the company said.

Primark is one of around 125,000 employers to have voluntarily returned furlough cash that was used to help cover 80 per cent of workers’ salaries.

According to HMRC figures, this amounts to £700million of the total £57billion claimed under the scheme as of March 15.

Companies including furniture store Ikea, house builders Barratt and Taylor Wimpey and contractor Serco are among those that have handed back furlough money.

Halfords, who remained open as an ‘essential retailer’, said they would pay back £10.7million after experiencing ‘stronger than anticipated’ sales.

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 £121 million referred to above. This includes the repayment of £72 million to the UK Government.’

The company has also declared a dividend of 6.2p a share, worth £49 million, having scrapped any dividend payments last year.

The company said it expects to be trading from 68 per cent of selling space by the end of April.

Primark enjoyed ‘record’ sales in England and Wales in the first week of reduced lockdown restrictions allowing stores to reopen, the company said.

But the pandemic and forced closure of stores hit parent company Associated British Foods hard in the six months to February 27 with sales down 17 per cent to £6.3 billion and adjusted profits before tax down 50 per cent to £319 million.

Primark’s owner also revealed it will repay £121 million in furlough cash claimed for workers in the current financial year, including £72 million to the UK Government, and will not make any further claims under various government job retention schemes.

Following the decision to repay taxpayer cash, the company also announced it will pay a 6.2p-a-share interim dividend to shareholders worth £49 million.