Primark warns of £1bn hit from lockdown shop closures

Primark warns of £1bn hit from lockdown shop closures

Primark owner Associated British Foods has warned its fashion chain could lose more than £1bn-worth of sales if the current store closures under lockdown continue until the end of February.

At the moment, 305 of Primark’s 389 global stores are closed – including all 190 of its UK stores.

However, unlike rivals such as Asos the retailer has no online operation to fall back on.

Its sales fell 30% to £2bn in the 16 weeks to 2 January.

Since March last year, non-essential shops in the UK and overseas have faced strict curbs and prolonged closures.

In England all are currently shut and not expected to reopen until at least the middle of February.

In a statement Primark said: “Making the assumption that all of the stores currently closed remain closed until the financial half year, at 27 February 2021, the loss of sales caused by temporary store closures would reach some £1.05bn.

“This is up from our previous estimate, based on announced closure dates, of £650m.”

The retailer said it would partially mitigate this by cutting its costs, but did not say if that would mean job losses.

“On this basis, we expect the adjusted operating profit for Primark in the first half to be broadly break-even, which would compare to an adjusted operating profit of £441m for the same period in the last financial year,” it added.

Richard Lim of analysts Retail Economics said Primark’s inability to switch to online trading during periods of lockdown had been “laid bare” in its latest sales figures.

“As the lights went out across their store estate, sales were effectively switched off too while the competition pivoted to online platforms,” he said. “The longer these disruptions continue, the larger the price they will have to pay.”

Associated British Foods also owns food and agriculture businesses. Sales across the group were down 13% in the 16 weeks to 2 January at £4.8bn.

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