Primark to pay £370m for garment orders

Primark has pledged to pay £370m to its suppliers for products that have already been ordered after being criticised for cancelling millions of pounds worth of orders.

Primark said it would now take all product that was in production, finished and planned for handover by 17 April.

The retailer had previously committed to paying for orders that were in transit or booked for shipment by 18 March, but cancelled new orders on 23 March.

It said: “Primark’s product and sourcing teams will continue to work closely with suppliers to implement these plans. 

“Where suppliers need new sources of credit, Primark will seek to assist by, for example, demonstrating our commitment to orders, initiating conversations with international lenders and liaising with governments.”

Primark said its commitment followed “extensive one-to-one conversations with suppliers, which began four weeks ago and helped identify mitigating options, including extended payment terms”.

It said it hoped to re-commence placing future orders for autumn and winter stock once there is further clarification on its reopening of stores.

Paul Marchant, CEO of Primark, said: “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.

“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 has been particularly hard hit among clothing retailers as it has no online ordering facility or click-and-collect services for its products.

It has gone from making £650m in sales a month to nothing as the coronavirus lockdown forced it to close all stores in Europe and the US, the BBC said.

Primark owner Associated British Foods "has been squarely in the path of this pandemic," chief executive George Weston was quoted as saying.

He said while he would "love" to be able to reopen Primark stores, "I know that we must not do so until we have suppressed this disease".

Earlier this month, Primark established a fund to cover the wages of garment workers, after it was criticised for cancelling orders in Bangladesh worth approximately $273m.

Separately, Asda is reported to have cancelled a quarter of orders with clothing suppliers and told suppliers it would only pay for part of cancelled orders, according to the BBC. This was despite seeing record food sales during the coronavirus pandemic.

Asda said suppliers would be paid 30% of the order value for orders that have not yet been finished, and half for those that have, rising to 60% for manufacturers based in Bangladesh.

It also promised to pay costs within seven working days, as well as allowing suppliers to resell items or donate them to charity.

Brands such as H&M and Zara-owner Inditex have committed to pay in full for existing orders from clothing manufacturers.

Last week, the Arcadia group, which owns Topshop and Topman, was revealed to have threatened to cancel orders from suppliers which had already been shipped if they failed to grant a 30% discount.

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