Sales slump for Primark owner
PRIMARK owner Associated British Foods (ABF) is set to unveil a slump in sales and profits after the high street giant was hammered by the latest coronavirus lockdown.
The company is expected to reveal that it missed out on £1.1 billion in sales over the six months to February as a result of further enforced closures to its stores, in an update to investors tomorrow.
However, many analysts are optimistic that the consumer giant will recover ahead of the market.
Tomorrow shareholders will be keen to hear how Primark stores traded in their first week since customers were welcomed to stores again last Monday.
Unlike many competitors, Primark has not been able to trade at all in the UK since stores shut as it continues to stand firm on its bricks and mortar strategy and avoided launching online.
In February, the retailer said just over one fifth of its stores - 77 sites, primarily in the US - were still able to trade, but the recent reopening of some economies will help spark further sales in the current half-year.
ABF is expected to reveal sales of around £2.2 billion for the Primark business in the six months to February 27. However, this will represent a stark slump against its £3.7 billion figure it posted for the same period a year earlier.
Analysts at Shore Capital have said that, although there is still uncertainty surrounding the pandemic, they positive that the Primark format is “set to bounce back strongly”.
The equity experts were also positive about the “positive momentum” seen across ABF’s food and ingredients businesses.
“ABF has shown remarkable agility and resilience through the pandemic and its excellent cash generative traits and strong balance sheet leave the Group very well placed for the future,” said Shore’s Clive Black and Darren Shirley.
The firm told investors in February that its grocery, sugar, agriculture and ingredients arms were expected to see revenues and profits ahead of expectations.
Shareholders will be hopeful that the resilience of ABF other operations will mean it will be able to pay out an interim dividend, having cancelled its last two payouts.
Analysts have pencilled in a 36p per share dividend, worth around £285 million, but this may depend on a positive outlook for Primark’s recovery.