Primark owner takes £1.5bn sales hit from lockdown restrictions
Primark owner Associated British Foods (ABF) this morning warned lockdown store closures would take £1.1bn off first half sales, increasing to £1.5bn for the full year even when shops re-open
Primark sales in the first half to 27 February are expected to be about £2.2 billion pounds, down from £3.7bn in the same period last year, and the adjusted operating profit to be marginally above break-even.
Due to lockdown restrictions placed on Primark it forecast sales, adjusted operating profit and adjusted earnings per share for ABF as a whole to be lower than last year.
Just 77 Primark stores are open currently, it said in a trading update
However, ABF expects revenue and profit in its grocery, sugar, agriculture and ingredients businesses, which owns everything from Kingsmill bread and Ryvita to Blue Dragon meal sauces and Twinings tea to beat expectations and the first half of last year.
The conglomorate said Silver Spoon, Jordans, Dorset Cereals, Ryvita, Patak’s and Blue Dragon all delivered growth as locked-down Brits ate and cooked at home more.
Shares in Associated British Foods edged up 0.3 per cent to 2,444p this afternoon.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown said of the sales slump:
“The re-closure of the Primark estate is costing a pretty penny, with lost revenues expected to cross the grim £1bn milestone. However, the retail chain is a force to be reckoned with. When previous lockdowns ended we saw demand rebounded strongly.
“Like-for-like sales were down 15 per cent in the last round of reopening, which sounds bad on paper. In reality that’s an impressive recovery when you consider people had little reason to visit the high street, and Primark’s lack of online business.
She added: “Even more importantly, so strong is the demand for Primark’s clothes, excess inventory has been less of a problem during the pandemic, because more of it flies off the shelf than expected once the doors open. That helps protect profits and cash”.