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Primark has lost out on £2bn of sales and £650m of profit as a result of the coronavirus pandemic, contributing to a dive in annual profits for the retailer’s parent group.
Associated British Foods (ABF), which also owns Twinings teas, Kingsmill bread and Dorset Cereals, said sales at Primark dropped 24% to £5.9bn and profits slumped 62% to £362m after the chain, which does not sell online, was forced to close for three months during lockdowns around the world. Primark’s profits had been expected to top £1bn this year.
On Monday the retailer said it expected to lose £375m in sales during the next lockdown, with 57% of its shops closed temporarily from Thursday.
The problems at Primark helped push ABF’s profits down 42% to £686m in the year to 12 September, with revenues 12% lower at £13.9bn despite a strong performance from its grocery and sugar processing businesses.
George Weston, the chief executive of ABF, said Primark had delivered a “robust performance, receiving an overwhelmingly positive response when it safely welcomed customers back to its stores”.
The company said it had been able to sell off its summer stock with minimal discounts as shoppers queued to enter stores. It took £98m in furlough payments for staff at closed stores during lockdown while other workers took pay cuts, helping to reduce overheads by half.
Sales of children’s clothing, leisurewear and pyjamas rose above pre-Covid levels once stores reopened, but sales of men’s suits and luggage were down, reflecting working from home and restricted travel.
Primark’s city centre stores reported a “significant decline” in visitor numbers, but those in shopping centres and regional high streets welcomed a similar number of shoppers to last year once they were allowed to reopen.
Weston said ABF had the cash resources to see it through the next lockdown. It has cancelled its final dividend but said it expected Primark’s sales and profits to increase in the year ahead despite the prospect of a tough Christmas.
Source: The Guardian
Keyword: Primark has lost £2bn of sales because of Covid pandemic | Business