The UK’s high street woes continue amid the coronavirus lockdownas 68,000 Primark staff are furloughed across Europe and Cath Kidston’s 60 stores face permanent closure.
The owner of budget fashion firm Primark also revealed a £248 million hit for unsold stock as all its stores remain shut.
Associated British Foods boss George Weston said the group had been ‘squarely in the path of this pandemic’ but would not reopen Primark stores until the disease is under control.
Mr Weston told the PA news agency the company would have ‘had no option but to fire staff’ were it not for the furlough scheme.
It comes as the owner of Cath Kidston has secured a deal to buy back its brand and online operations after sliding into administration, in a move which will leave many of the firm’s 740 jobs still at risk.
Baring Private Equity Asia, which has held a stake in the retailer since 2014, said it will buy the online business, brand and wholesale arm from administrators Alvarez & Marsal.
However, the deal does not include the retailer’s 60 stores, leaving them facing permanent closure.
Melinda Paraie, chief executive officer of Cath Kidston, said: “While we are pleased that the future of Cath Kidston has been secured, this is obviously an extremely difficult day as we say goodbye to many colleagues.
“Despite our very best efforts, against the backdrop of Covid-19, we were unable to secure a solvent sale of the business which would have allowed us to avoid administration and carry on trading in our current form.
“I would like to thank all our employees for their hard work, loyalty and patience over the last few weeks as we worked through this process.”
A survey from the British Chambers of Commerce suggested around one in three British businesses has furloughed between 75% and 100% of its workforce.
Associated British Foods boss George Weston said the group had been ‘squarely in the path of this pandemic’ but would not reopen Primark stores until the disease is under control
Primark has seen sales plunge from £650 million a month to zero as coronavirus has caused the 376-strong chain to shut completely, with no online business to fall back on.
Half-year results showed pre-tax profits slumped as Primark was left with piles of stock it was unable to sell amid the global coronavirus lockdown, falling 42% to £298 million in the six months to February 29.
Total charges in the first half soared to £309 million, compared with £79 million a year earlier, including the £248 million stock costs.
However, Mr Weston said the company would not launch online in a bid to shift stock it has been unable to sell.
He told PA: ‘We will sell that stock in stores but it might take a while.
‘It might be in a year’s time but it’s not going to deteriorate and we will just have to wait until we can open stores again safely.
‘I think this is the cost of Covid rather than not having online operations.’
Primark revealed on Monday it had agreed to pay an additional £370 million to suppliers to cover stock currently in production or yet to be delivered after facing criticism over order cancellations during the coronavirus crisis.
The fashion chain said the deal will cover products which were in production or due for shipment by April 17, having previously committed to pay for orders which were in transit or booked for delivery by March 18.
Bosses also set up a fund to support the thousands of garment workers affected.
Mr Weston laid bare the ‘human tragedy’ of the Covid-19 crisis as he reported half-year figures, as he said two of the group’s employees have died from Covid-19 in the past three weeks while another remains in intensive care in the United States.
Its food and agriculture business – spanning sugar, groceries and ingredients, including brands such as Twinings tea and Kingsmill bread – is helping the firm weather the crisis while cost cutting will also help it mitigate half the operating costs of Primark while stores remain shut.
The company said it has seen a 20% jump in bread sales, while other store cupboard products such as Blue Dragon noodles and Ryvita crackers have also seen sharp sales increases.
Mr Weston said: ‘Much as I would love to be allowed to reopen Primark stores across the UK, continental Europe and the USA soon, because lockdown has so harmed our business and our supply chains, I know that we must not do so until we have suppressed this disease.
‘When we are allowed to reopen we must make our Primark stores safe for our staff and our customers, even if that means ensuring there are fewer people shopping at any one time and so accepting lower sales at least until the remaining risk is minimal.
‘In time, we can rebuild the profits. We can’t replace the people we lose.’
A survey from the British Chambers of Commerce suggested around one in three British businesses has furloughed between 75% and 100% of its workforce.
Meanwhile High Street fashion chains Oasis and Warehouse have fallen into administration, leading to more than 200 immediate job losses.
A message from the CEO of Primark, Paul Marchant, talking about store closures during the coronavirus crisis
Closed shops on a quiet Kings Road in Chelsea, West London, as life in Britain continues during the lockdown
Some 1,800 staff across the shops, concessions and head office will be furloughed and receive 80% of pay.
The brands will continue to be sold online ‘short-term’ while the administrators try to sell the brand.
The two brands, which run 90 stores, appointed auditor Deloitte to run the process.
The Oasis and Warehouse Group has been looking for a saviour for weeks but could not close a deal due to the pandemic.
It is owned by failed Icelandic bank Kaupthing.
The lockdown has already claimed Laura Ashley, electrical retailer Brighthouse, and restaurant chains Carluccio’s and Chiquito.
Many firms were already reeling after last year, the worst for the high street in a quarter of a century.
Meanwhile, there are fears are building that gyms, pubs and restaurants may never reopen as landlords threaten them with eviction for unpaid rent during the coronavirus lockdown.
Nearly 3,000 gyms and leisure centres now face the threat of closure, while top chef Yotam Ottolenghi has warned that restaurants are suffering the same issue.
The Oasis and Warehouse Group has been looking for a saviour for weeks but could not close a deal due to the pandemic
Pubs and non-essential shops have also faced trouble paying rent, amid fears they will not be able to reopen after the pandemic because they will have no cash left.
Up to 100,000 jobs could be at risk at gyms with trade body UKActive calling for urgent action to protect places of exercise which remain shut due to the pandemic.
Fresh legislation to protect commercial tenants was brought in last month, but it does not stop landlords forcing them to pay rent withheld due to the lockdown.
A study of 34 non-food retailers including Dunelm, JD Sports, John Lewis and Next has found that many may not survive the pandemic sweeping the nation.
Even after government support, more than half of major non-food UK retailers will run out of cash within six months, according to the report.
The study was conducted by professional services firm Alvarez & Marsal (A&M), in partnership with Retail Economics.
It found that five out of the 34 major non-food retailers analysed already had negative cash flow at the outbreak of the pandemic.