Primark agrees deal with suppliers following backlash

By

Barbara Santamaria

Published
Apr 20, 2020

Retail giant Primark has agreed to pay suppliers an extra £370 million after being criticised for cancelling orders due to the coronavirus.

The company, which has no online operation, has been badly hit by the UK lockdown, leaving it with billions of pounds worth of stock in stores, depots and in transit.

On 22 March, it announced it was cancelling all orders in production at factories by triggering a 'force majeure' clause in contracts. The move, designed to prevent the company from taking more stock, sent shockwaves through its global supply chain.

But the cut-price fashion retailer has now revealed it has been negotiating with suppliers to pay for “as much of the previously ordered product as possible”.

The new deal covers products which were in production or due for shipment by 17 April. Orders for Autumn/Winter stock will be placed once there is more information about the end of the Covid-19 lockdown.

Primark said it will face losses of £650 million for every month its UK stores are forced to remain closed.

Chief executive Paul Marchant 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.

“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 has also recently revealed it will donate 74,000 products to the NHS Nightingale Hospital in London. Everyday items including  underwear, leggings, T-shirts, footwear, and towels will be delivered in packs to support those at the forefront of the fight against Covid-19.