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April 20, 2020

Primark extends supplier support by GBP370m

Value fashion retailer Primark has extended support to its suppliers by committing to pay for GBP370m (US$461m) worth of additional orders, over and above the GBP1.5bn of stock already in stores, depots and in transit.

By Michelle Russell

Value fashion retailer Primark has extended support to its suppliers by committing to pay for GBP370m (US$461m) worth of additional orders, over and above the GBP1.5bn of stock already in stores, depots and in transit.

The commitment means Primark will now take all product that was both in production and finished, and planned for handover by 17 April. It follows four weeks of one-to-one discussions with suppliers to identify “mitigating options”, including extended payment terms, the fast-fashion retailer said in a statement today (20 April).

The retail group, owned by Associated British Foods (ABF), had been widely criticised for cancelling all orders with its suppliers after closing all its stores on 22 March due to coronavirus. The company, which is losing sales worth GBP650m every month because of the closures, had asked suppliers to stop production as it already had about GBP1.5bn of paid-for stock in stores, depots and in transit.

The new commitment brings Primark’s total stock both owned and committed to nearly GBP2bn while its stores remain closed.

“This announcement represents a further ongoing commitment to our relationships with our suppliers,” says CEO Paul Marchant. “We have been in close and regular contact with our suppliers over the last few weeks to find a way forward, and to pay for as much of the previously ordered product as possible.

“Transparency and clarity have been at the heart of our longstanding relationships with our supply base and we were obviously disappointed that we were not initially able to commit to this stock. Our partnerships with our suppliers are invaluable and we want to continue to support them as we navigate our way through this global crisis.”

Primark says its product and sourcing teams will continue to work closely with suppliers to implement the new plans. Where suppliers need new sources of credit, the retailer says it will seek to assist by, for example, “demonstrating our commitment to orders, initiating conversations with international lenders and liaising with governments”.

It is also hoping to re-commence placing future orders for autumn/winter stock once there is further clarification of the reopening of stores.

The retailer says the new commitment will not affect the commitment it has made within the wages fund Primark announced on 3 April. The fund was established to make sure workers are paid as soon as possible for work on its product that was in production.

The fund covers the wages component of orders that it cancelled in Bangladesh, Cambodia, India, Myanmar, Pakistan, Sri Lanka and Vietnam.

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