Primark to Fund Wages of Factory Workers After Canceling Orders

(Bloomberg) --

Primark has set up a fund to pay the wages of factory employees who worked on clothing orders that were canceled by the budget fashion chain because of the coronavirus pandemic.

The U.K. retailer, owned by Associated British Foods Plc, said it would cover the wage component of clothing orders that were scheduled for shipment within 30 days after it called off all deliveries. The fund will support workers in Bangladesh, Cambodia, India, Myanmar, Sri Lanka and Vietnam.

Primark has closed all its shops across the U.K., Europe and the U.S. following the outbreak of the virus, costing it 650 million pounds ($796 million) of lost revenue a month. After the store closures, it asked all of its suppliers to stop production.

The retailer has already paid for 1.6 billion pounds of stock that was in stores, in depots, or in transit before it took the decision to scrap further orders.

Paul Lister, general counsel at Primark, said its in-country teams were already working to identify the factory staff who should benefit from the fund. The move will cost Primark millions of pounds, he said.

“We think we can do this very quickly,” Lister said. “Accuracy is not the most important thing here, the most important thing is to make sure the workers get paid.”

Payments to workers will be adjusted to reflect any government support packages provided in each of the countries.

Paul Marchant, chief executive officer of Primark, said the retailer had no choice but to cancel the orders as it already had a backlog of stock in stores. “Finding a way to ensure that workers in our supply chain in these countries are paid has been a priority over the past two weeks.”

©2020 Bloomberg L.P.