Primark restores cancelled orders, places fresh ones too

The Irish retail fashion brand Primark has restored all of its cancelled or suspended orders to Bangladeshi garment manufacturers, and recently placed fresh orders too, industry sources have said.

Moreover, exporters are optimistic that the retailer will further boost its order placements in the coming days, as retail sales have been higher than expected since stores reopened after the Covid-19 lockdown.

Speaking to The Business Standard, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Director Miran Ali said, "As far as our knowledge goes, Primark has restored all its orders to all suppliers, and it is placing fresh orders too."

Miran also serves as managing director of Bitopi Group Ltd, a supplier for Primark.

Echoing his views, Mesbah Uddin Khan, managing director of Union Sportswear Ltd – a concern of the Windy Group – said, "The Irish fashion retailer previously cancelled or suspended orders for 2.2 million pieces of apparel items. But it has restored all of those orders, and has also been taking delivery of those goods. The backlog will be cleared by this month.

"Despite the Covid-19 pandemic, Primark recently placed fresh orders for around 1 million pieces of apparel items, which are scheduled for shipment from next month."

Mentioning that Primark has been responding very well to Bangladeshi apparel makers, he stated that the fashion retailer has been a great business partner to Bangladesh.

Primark procures apparels worth around $900 million annually from over 100 apparel factories in Bangladesh. Apparel makers said Bangladesh is its second-largest sourcing hub after China.

Sources said Primark might be discontinuing their business with some two to three keyline suppliers of the brand, as those failed to maintain their compliance during the pandemic.

They added that some factories had allegedly laid off workers without paying their salaries and other benefits. A keyline supplier factory located in the Gazipur area – which has been doing business with Primark for the past ten years – is also facing the same allegations.

According to sources, orders that had been cancelled or withdrawn by this particular retailer were quite high compared to other global fashion brands, reaching about $273 million amid the pandemic. Primark operates 376 stores in 12 countries.

According to BGMEA officials, the cancelled and suspended orders reinstatement ratio is 80 to 90 percent by global retailers and brands. Earlier, over a thousand factories had reported cancellations or withdrawal of orders worth $3.18 billion.

Among other fashion brands and retailers, C&A cancelled orders worth $166 million, Inditex $109 million, Mothercare PLC $62 million, BESTSELLER $59 million, KIABI $57million, VF Corp $56 million, Tesco $50 million, Kohl's $39 million and Walmart $38 million.

According to a recent report by the BBC, the owner of fashion chain Primark said its sales have been higher than expected since stores reopened after lockdown, but are still lower than the last year.

Associated British Foods – the parent company of Primark – said sales since reopening would hit $2.61 billion by the end of this year. However, that would be 12% lower on a like-for-like basis compared to 2019.

Primark's four biggest stores, located in Birmingham, Manchester and London were especially hard hit, Associated British Foods said, adding, "If the four large UK destination city centre stores are excluded, the decline is 5%."

"After a period of store closure, we are encouraged by the strength of our sales," AB Foods said in its latest trading update. "In the latest four-week UK market data for sales in all channels, Primark achieved our highest-ever value and volume shares for this time of year."

"We have continued our policy of offering the best prices, and markdowns for the period since reopening have been low."

Primark had made it clear before its stores reopened on June 15 that there would be no special discounts to shift stock.

AB Foods said full-year profits at Primark in this year until September 12 would be at least at the top end of its previously advised $3.9 million to $4.60 million range. Last year, the equivalent figure was $1.20 billion.