Primark takes £ 430 million sales hit
Primark owner Associated British Foods has taken a £ 430 million hit to sales as a result of pandemic lockdowns and restrictions but still expects profits to rise.
T h e f i g u r e i s h i g h e r than expected although the company has recovered some of the costs, with overheads falling 25 per cent during the autumn lockdowns, and early signs that reopened stores are seeing strong sales.
C u s t o me r s a t P r i ma r k , which reopened its branches s outh of t he B order on Wednesday, have been eager to buy clothes again and long queues have formed at some stores.
To max i mi s e s a l e s a n d spread out customer numbers, some sites have continued trading through the night, while others have extended opening hours, including at Fort Kinnaird in Edinburgh where trading will extend to 10pm next week.
ABF said 34 stores remain temporarily closed, including all outlets in Northern Ireland and Austria, representing 7 per cent of Primark’s retail selling space. This compares with 62 per cent when the hi ghest number of s t ores were closed in November. Last month bosses had predicted sales would be hit by £ 375m.
Chairman Michael Mclintock said: “Sales in the days since reopening i n each of
these markets have once again been very strong, reflecting the excitement and appeal of the Primark offering.
“We have extended the opening hours during this festive season in most of our stores i n t he Republic of I reland and England to cater for the anticipated higher customer demand.”
Susannah Streeter, analyst a t Hargreaves Lansdown, said: “The cost of the latest lockdown was the final nail to hammer ABF’S competitor
Arcadia group, pushing it into administration.
“So it comes as little surprise that the Primark owner now says the forced shuttering of stores was an even bigger hit to sales than first forecast, now putting the price at £ 430m.
“Remarkably, despite this sizeable hole in revenues, ABF still expects profits to reach higher levels than last year. At a time when rivals on the high street like Top Shop, Debenhams and Bonmarche face being wound up or sold, Pri
mark is proving highly resilient.”
She added: “It doesn’t have an e- commerce arm to offset store closures, instead it has a highly loyal customer base, who have waited until stores reopened to satisfy their pent up shopping desires.”
Mclintock’s comments also included an update on postBrexit transition plans, saying preparations are complete.
He noted: “Following t he UK’S exit f rom t he EU, our businesses have completed all
practical preparations for the end of the transition period this month and contingency plans are in place should our businesses experience some disruption at that time.”
In this financial year, new stores have been opened in the US, with “encouraging” performance from its remaining sites. Strong sales were also seen in the company’s first store in Rome, and a fifth site was opened in Barcelona.