Primark agrees to pay £370m for Covid-19 affected procurement

Primark is committing to paying its suppliers £370m in additional orders for product over and above the £1.5 billion of stock in stores, depots and in transit, despite the closure of all of its stores since the 22 March.

The retailer will now take all product that was both in production and finished, and planned for handover by 17 April.

Primark – which won the Environmental Improvement Award at the 2019 Supply Chain Excellence Awards – said that it had held “extensive one-to-one conversations” with suppliers in its supply chain over the past four weeks ago which had helped it identify mitigating options, including extended payment terms.

Chief executive Paul Marchant said:  “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 said its product and sourcing teams would continue to work closely with suppliers and where suppliers needed new sources of credit, Primark would seek to assist.

It also said it hoped to re-commence placing future orders for Autumn/Winter stock once there was further clarification of the reopening of stores.

Primark had previously committed to paying for orders that were in transit or booked for shipment by 18 March. This move brings Primark’s total stock both owned and committed to nearly £2 billion while stores remain closed.

Earlier this month Primark established a fund to make sure workers are paid as soon as possible for work on Primark product that was in production.