Primark owner to pay back £121m in furlough cash despite falling sales

Associated British Foods has seen clothing sales tumble but expects a boost after last week’s reopening

Primark's owner has pledged to hand back £121m claimed under the furlough scheme despite announcing plunging profits as stores remained closed for much of the autumn and winter season.

Associated British Foods (ABF), which owns Primark as well as grocery brands including Twinings tea and Ryvita, reported a 50 per cent fall in operating profits in the six months to 27 February.

Primark boss George Weston said the company claimed £98m during the previous financial year and a further £79m in the current year so far to support Primark's 65,000-strong workforce.

He said he believed Primark's stores would start to generate cash again after reopening in England last week as Covid restrictions were eased. The company expects 68 per cent of its store space to be open by the end of the month.

Primark has become the latest big-name retailer to hand back government support. Large supermarket chains including Tesco, Sainsbury’s and Morrison’s collectively returned more than £2bn in business rates relief which had been intended to help struggling businesses make it through the pandemic.

ABF announced that it would restart its shareholder dividend which had been suspended last year. It will pay out £49m at 6.2p per share.

Some large companies have come under fire for paying out bumper dividends to shareholders while accepting taxpayer-funded financial support.

While ABF has lost out on hundreds of millions of pounds in clothing sales, its food brands have benefited from rising supermarket sales as shoppers have been stuck at home.

Its grocery, sugar, agriculture and ingredients divisions all boosted revenue and posted an aggregate 30 per cent increase in profit on the previous period.

Mr Weston 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."