Covid cash return | Primark to hand back £121m in furlough money

Primark to hand back £121m in furlough money

Since the coronavirus pandemic gripped the nation, the Government rolled out the Coronavirus Job Retention Scheme (CJRS) – more commonly known as furlough – to help protect jobs within workplaces that were forced to close.

This furlough scheme has proven to be a lifeline for business – particularly in the hospitality, retail and tourism sectors as they have been able to keep staff on board thanks to the contribution.

However, with workplaces now opening up once again thanks to lockdown restrictions starting to lift, employers are starting to repay the furlough cash they received from government schemes. One such business is the fast-fashion retailer Primark.

The Evening Standard reported that Primark’s owner Associated British Foods (ABF) will repay £121million in furlough money claimed under government retention schemes, while also paying out a dividend to shareholders despite a decline in profits.

ABF, the parent company of Primark, stated that the decision comes despite stores remaining closed for most of the autumn/winter period, which has resulted in revenues and profits declining.

In fact, sales were down by 17% to £6.3billion, while adjusted operating profits dipped by 50% to £319million in the six months to February 27.

George Weston, Chief Executive of ABF, claimed that the repayments would be made as he was confident that stores would become cash generative following the easing of restrictions.

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.”

 

ABF's Chairman Michael McLintock, added: "...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.”

Businesses return cash

Primark isn’t the only employer to hand back cash. A number of companies including ASOS, IKEA, Taylor Wimpey, Barratt and Redrow have either already given back their contributions to the Government or stated that they won’t take it despite qualifying for the scheme.

More than £215million has been returned to the Government in furlough payments that businesses decided they did not want or need, reported the Mirror.

According to figures from HM Revenue and Customs, so far 80,433 employers have returned money that they were given to cover the salaries of their workers throughout the crisis.

Reputation boost

These businesses’ decision to return the furlough payments they received will no doubt help to boost their reputation in the eyes of the public, something that will be particularly beneficial among employers who have had to shut up shop for a number of months.

This is a notion that Chris Leadley, Marketing Manager at Forbes Burton, a business rescue and insolvency specialist, concurred with.

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Speaking to HR Grapevine, he explained that Primark’s decision to give back the money will likely be a “PR coup and will certainly generate an immediate amount of goodwill with their customers”.

He continued: “It will also have the added short-term benefits of bringing in new customers with the positive position it has generated through the press coverage.

“Whether this will carry through in the long term is yet to be seen, Primark will have to capitalise on this boost and back it up with a good campaign to ensure it can keep people coming back as they look to turn around what has been a very difficult period for them.”



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