Primark in storm over conditions at UKsupplierFashion giant acts after investigation Share 45 inShare0 Email Dan McDougall The Observer, Sunday 11 January 2009Britains high street fashion giant Primark was at the centre of a storm last night over allegationsthat illegal immigrants paid just over half the minimum wage had been employed to makefashionable knitwear for one of the firms bestselling ranges.Primark announced yesterday that it had launched an inquiry after an investigation by theObserver and the BBC revealed that Manchester-based garment firm TNS Knitwear may havebreached key employment and immigration laws. Breaches of the legislation could lead to finesof up to £10,000 for each illegal worker and potential prosecution for tax evasion andemployment law abuses.Primark also said it had handed material uncovered by the investigation to the UK BorderAgency.The workers, caught by an undercover journalist on a hidden camera, were allegedly being paid£3 an hour - just over half the minimum wage of £5.73 - for 12-hour days, seven days a week.Many of the garments made by the Pakistanis, Afghans and Indians over the past five monthshad ended up two miles away in one of the retail giants largest and most profitable stores inManchesters bustling Market Street.The allegations were put to Primark this weekend, five months after an undercover investigationbegan into Primarks British supply chain. The investigation focused on Manchesters textileindustry and in particular TNS Knitwear, which supplies 20,000 garments to the firm everyweek. Fashion Waves, a supplier used by TNS, was also investigated.Employees at both TNS and Fashion Waves were caught on film admitting their illegal status inthe UK. One Pakistani working on a Primark order tells how his visa had run out eight years ago,yet he had remained in Britain working under the radar of the authorities. Working conditionsinside both TNS and Fashion Waves were also exposed as cramped and cold, in breach of healthand safety regulations. Most dramatically, the undercover journalist working at both unitscaptures cash-in-hand payments being made to her for gruelling hours. The money, apparently
paid without the knowledge of the taxman, amounts to about £3.50 an hour, £2.20 less than theminimum wage. TNS Knitwear denies the allegations, and there was no comment from FashionWaves.A Primark spokesman said last night that the issue was now a matter for the authorities. "Primarkwas informed this week that one of the UK factories from which it buys some knitwear hasallegedly broken a number of UK employment, tax and immigration laws," he said. "Primark isconducting its own investigation. Once that investigation is completed, it will decide how toproceed. Meanwhile, Primark has handed all relevant information passed to the company over tothe relevant enforcement agencies so they may take action."We are extremely concerned about the very serious allegations made against our supplier TNSKnitwear and against TNSs unauthorised subcontractor, Fashion Waves."Meanwhile, the firm agreed last night to remove all references to the Ethical Trade Initiative, thetrade body that monitors Britains top retailers, from its 140 storefronts across England, Scotland,Wales and Northern Ireland.The firm, as part of an agreement made with the ETI on Friday, must also remove ethicalbranding from thousands of tills and its corporate website while investigations continue.TNS Knitwear, which supplies some of Britains most famous brand, is run by Pakistan-bornZahid Sarwar, a British citizen and TNS director. Last night it denied any wrongdoing. TNSKnitwear has made millions over the past five years from the so-called "fast fashion"phenomenon where garments are tracked and rapidly reordered to make sure they keep flying offthe shelves. Sarwars solicitors confirmed to the Observer that the company had been audited byPrimark in the past six months.Primark said yesterday that it had initiated a "timed remediation programme" following the audit.TNS was a "relatively small supplier", Primark added, saying that if the allegations proved to betrue, a deliberate attempt must have been made to mislead auditors.On Primarks website, www.ethicalprimark.com, the code of conduct reiterates theconglomerates stance that wages and benefits paid to suppliers to their company for a standardworking week must meet national legal standards or industry benchmark standards, whichever ishigher. The same website states that working hours must comply with national laws andbenchmark industry standards, whichever affords greater protection. The firm also claims toadhere to the ETI code of conduct.Last night, the ETI said in a statement that it was investigating the latest scandal to hit Primark."We are horrified at the allegations of abuses exposed by this investigation and we areparticularly concerned that they involve an ETI member. First, we have met with Primark anddemanded that it provides us with a prompt, full and frank response to the allegations. Wherethey are substantiated, the company has a clear obligation to work with the suppliers concernedto put things right.
"Second, we have immediately launched a formal inquiry to establish whether or not there is asystematic failure on Primarks part to implement the ETI base code. If such a failure wereestablished, this would be grounds for formal sanctions."But last night Primark hit out at the ETI for forcing it into removing its ethical branding. Aspokesman said: "Primark is surprised and disappointed with the public stance adopted by theETI... The ETI is prejudging the situation by adopting this stance before Primark and the relevantUK authorities have even had the opportunity of investigating the allegations made about TNS,let alone report on the outcome of those investigations to the ETI."Primark is expanding more rapidly than any other British retailer. The company is planning toexpand to Portugal, Germany and the Netherlands in 2009. Meanwhile, British shoppers canexpect more new stores in the UK, where Primark already operates 4.8 million sq ft of retailspace across 140 stores, employing 25,000 people. Its flagship Oxford Street store sold morethan one million garments in its first 10 days of trading.Primarks parent company, Associated British Foods, which also controls Selfridges and ownsTwinings, Ovaltine, Ryvita, Jordans and Patak, as well as multi-billion-pound sugar andagriculture interests, regards Primark as the jewel in its crown. Boosted by Primarks profits, thecompany last year posted revenues of £8.2bn. Business PrimarkPrimark bucks downward trend on the highstreet Share 0 inShare0 Email Kathryn Hopkins The Guardian, Monday 23 February 2009 17.35 GMT
The Nottingham branch of Primark. Photograph: David SillitoePrimark, the discount clothing chain famous for its throwaway fashion, reported a surge in salesover the past six months as cash-strapped consumers become increasingly price conscious.The retailer, which has 187 stores in the UK, Ireland, Spain and the Netherlands, said yesterdaythat its like-for-like sales rose by 5% in the six months to the end of February, compared with theprevious six months, with trading ahead of the expectations of its owner, Associated BritishFoods. Sales increased during the Christmas holidays and underwear sold well over theValentines period.Maureen Hinton, senior retail analyst at Verdict Research, said: "Primark is doing well becauseits target market is young and they are not so challenged by whats going on in the economy astheir parents. Its target market is still buying clothes because theyre not being affected as muchby unemployment."Primark has opened a new distribution centre at Thrapston, Northamptonshire, to support furthergrowth, and plans to open seven new stores in the next six months in places including Bristol,Cambridge, Portugal and Germany."Discount fashion retailers continue to buck the trend," said Stephen Zatland, senior executive atthe consultancy Accenture Retail. "The fast fashion model depends on responding quickly tochanging customer demands while still offering value for money. It sounds simple but thisproposition needs an excellent understanding of what your customers want and also efficient andstreamlined processes across the business."However, the retailers parent company, AB Foods, said that, when it presented figures for thegroup on April 21, its half-year profit would be less than last year as a slump in its Americangrocery business offset gains from Primark and from its Silver Spoon sugar refining business. Itsaid margins had been squeezed at its ACH Food Companies unit in North America, wherebrands include Mazola corn oil and Karo corn syrup.Jeremy Batstone-Carr, of the stockbroking
firm Charles Stanley, said: "This upbeat trading news offsets disappointing trading in the groupsgrocery operations, which will show a decline on last year after substantial margin erosion atACH and the impact of consumers trading down as competitive pricing strategies have resultedin weaker sales volumes in breakfast cereals."Underlying operating profit over H2 will be slightly lower than the previous year. The mix ofperformance within the groups operations has deteriorated and margins across the businesstherefore remain under downward pressure."Shares rose on the back of the news from Primark but closed down 2% at 643p.