Primark commits to pay for outstanding finished goods and suppliers’ fabric liabilities

Primark is announcing today a further substantial commitment to suppliers, pledging to pay our garment suppliers in full for all outstanding finished garments and to utilise or pay for any finished fabric liabilities.

This follows previously announced commitments to pay in full for orders that were in production, finished and planned for handover by 17 April, after all our stores were closed in mid-March. This ensures that our suppliers will be paid for all garments both finished and in production as well as any fabric costs incurred for Primark prior to the stores closing.

Primark will be working through the details of this commitment with these suppliers on a one-to-one basis over the coming weeks.

In addition, since stores have reopened, Primark has now placed some £1.2bn of orders for coming seasons (up from £1bn announced on 2 July). Primark also confirms that its standard 30-day payment terms remain in place.

Paul Marchant, Primark CEO, said:

“Covid-19 has had a devastating impact on our whole industry, not least our suppliers. At Primark, we will have lost some £2bn in sales this financial year and we had an £800m net cash outflow while the majority of our stores were closed.”

“In March, when we had no visibility of how long stores would be closed and already with some £1.5bn of stock in stores, depots and in transit, we had to take a number of actions quickly to ensure we were able to withstand the crisis. This included cancelling orders, which was one of the toughest decisions we have ever had to take.

“As we began to mitigate costs and could see a reopening timetable, we have prioritised more funds to support the supply chain, including establishing the wages fund and we committed to taking an additional £370m of orders in April. Now that we are trading once again, we have been able to place significant orders worth £1.2bn with our suppliers.

“We know our actions have been hard for our suppliers, including carrying the costs of these outstanding liabilities. This commitment ensures that our suppliers will have been paid for all in production and finished garments and fabric costs incurred for Primark and now that we are open and trading again, we are able to place new orders. The reality is that we need a healthy, thriving retail environment to underpin a healthy, thriving garment supply chain. This in turn will protect the jobs of the millions who work across our industry.”

Notes to editors:

Throughout this crisis we have worked hard to find cost mitigations, prioritising as much of these savings as possible back into the supply chain. For example:

  • In April we established a wages fund to make sure workers were paid as soon as possible for product in production - to date over £23m has been paid out.
  • We committed to taking an additional £370m of orders finished and/or in production. This brought our total stock owned or committed, while our stores were closed, to some £2bn.
  • Primark’s standard 30-day payment terms remain in place.
  • We have also provided suppliers with confirmed shipment dates for orders that remained delayed due to seasonality.
  • In April we endorsed the ILO led Covid-19 Action in the Global Garment Industry, working towards a coordinated global response to ongoing industry-wide issues. We continue to play our part in this initiative.