Penneys’ €51m dividend amid sweatshop claims

Published on 17 December, 2006. By John Reynolds 

PENNEYS, which was last week alleged to have bought clothes from Bangladeshi sweatshops, paid a €51.5m dividend back to its parent company Associated British Food.

Retail analyst Catherine Murphy at Verdict retail research suggests Penneys Irish sales topped €437m this year. Profits in the UK grew by 20 per cent and sales by 18 per cent this year.

Judging by average sales per store and its UK profit margin of 13 per cent, the €51.5m dividend could account for Penneys’ profits this year.

The size of the dividend, paid from a Penneys-related firm Dalesund Ltd to a Luxembourg-registered ABF firm, may indicate that sales are in fact much higher than previously thought, and contrasts starkly with allegations in a report by the War on Want charity that its clothes are made by women and young teenagers earning 7.5¢ an hour and as little as €12 per month.

Penneys’ €1.93bn Irish and UK operations are run by low-profile but hugely successful Dublin man Arthur Ryan.

Speaking to the Sunday Independent after the sweatshop allegations, a Penneys spokesman said: “We work to improve standards, but some factories are slipping through the net and not complying with the Ethical Trading Initiative.”

Tesco was also linked to the practice, although a spokesman said their affordable clothing was not achieved through suppliers’ poor working conditions, adding that it carries out rigorous in-house and independent inspections.

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