Primark’s owner has declared ‘fashion is back’ after the retailer saw a week of record-breaking sales following the reopening of the high street.
With an end to the Covid-19 pandemic in sight, shoppers are buying more outfits for going out, rather than stay-at-home comfort clothes, and are also making specific trips to city centre stores, boss at Associated British Foods (ABF) have said.
They added that the April 12 reopening has been different to last summer and over Christmas with shopping habits changing and record customer numbers in city centres.
Sales had plunged 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.
But in the first week of trading for non-essential retail, the company said it had seen its best sales ever by a comfortable margin.
John Bason, ABF’s finance chief said: ‘Many individual stores broke their own sales records. We were all excited in the lead-up to Christmas last year, but we’re beating the Christmas weeks.
‘This is our emergence from the third lockdown.
‘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.’
It comes as ABF announced it will hand back £121 million in furlough money claimed under government job retention schemes despite the drop in sales while stores were closed.
Primark’s owner Associated British Foods said the decision to hand back £121m in furlough cash was because of confidence of a recovery in sales as restrictions on retail eased across Britain
ABF chief executive George Weston 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.
Mr Weston said the furlough 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.’
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.
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
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.’
Primark also saw that the most improved store sales were in city centres, whereas previous lockdown reopenings focused on strong sales in retail parks.
Mr Bason said: ‘We’ve seen big improvements in our city centre stores – in Manchester and Birmingham in particular. It wasn’t just retail parks that saw strongest growth – it’s been across our estate. The most improved stores are those in city centres.
‘City centres have needed office workers and, when it comes to London, tourists. Tourism hasn’t come back at the moment and offices are coming back.’
Last year Primark rejected a £30million government retention bonus for bringing furloughed staff back to work.
Under a scheme introduced by Chancellor Rishi Sunak, firms are being given £1,000 for every worker they bring back into work, even if the company is already up and running following the coronavirus lockdown.
A spokesman for parent group ABF said: ‘The company removed its employees from government employment support schemes in the UK and Europe in line with the reopening of the majority of its stores.
Primark enjoyed ‘record’ sales in England and Wales in the first week of reduced lockdown restrictions allowing stores to reopen, the company said. Pictured: Customers queue to enter a re-opened Primark in Liverpool
‘The company believes it should not be necessary therefore to apply for payment under the Bonus scheme on current circumstances.’
John Lewis, which furloughed 14,000 staff during lockdown, has since followed suit, declining a grant of £14 million.
Primark 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.
Earlier this year, it emerged around 850 retail jobs had been lost each working day since the start of the year.
Analysis from the Centre for Retail Research (CRR) in February showed 27,096 jobs have been shed and 1,023 stores have been earmarked for closure so far in 2021.
The research, which covers insolvencies by retailers with 10 or more stores, highlights the turmoil on the high street, which has seen the recent collapses of Debenhams and Sir Philip Green’s Arcadia Group, which owned Topshop and Dorothy Perkins.
Some companies which have closed stores this year so far include up-market stationary chain Paperchase which announced the closure of 37 stores and the loss of 500 jobs in early January.