Primark profits plunge 60% after a difficult year with Covid

Primark profits plunge 60% after a difficult year with Covid
Primark endured a total loss of sales in the third quarter as stores were forced to shut under government-enforced lockdowns around the world.
// Primark’s adjusted operating profit fell 60% to £362m in the full year ending Sept 12
// Revenues dropped 24% to £5.9bn in the same 52-week period
// UK like-for-like sales down 12% and 17% across Europe since reopening from the first lockdown
// There is a chance Primark could extend its opening hours for Christmas once lockdown in England ends

Primark has revealed a slump in profit and sales for the past year after the enforced closures of its high-street stores and other Covid restrictions hampered its performance.

For the year ending September 12, the value retailer saw full year adjusted operating profit plunge by 60 per cent to £362 million, while full year revenues fell 24 per cent drop to £5.9 billion.

These figures were driven by a total loss of sales in the third quarter as stores were forced to shut under government-enforced lockdowns around the world – particularly in the UK, its biggest market.


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Primark said that since reopening from the first lockdown, UK same store sales have been down 12 per cent – or six per cent if the retailer’s four large UK destination city centre stores are excluded – while across its European estate they’ve been down 17 per cent.

Over in the US, Primark said sales since reopening in the US have been down 10 per cent year-on-year, although if the Boston city centre store were excluded from the figures, it said sales were unchanged from last year.

Meanwhile, the retailer’s operating profit margin dropped from 12.4 per cent down to to 6.1 per cent in the last financial year.

Despite the coronavirus pandemic disrupting its trading performance – especially since it does not trade online at all – Primark said it still managed to open 12 net new stores in the financial year, bringing its total portfolio to 384 stores globally.

Primark’s trading performance impacted the overall full year figures for parent company AB Foods, which reported a 40 per cent drop in operating profit to £810 million while group revenues declined 12 per cent to £13.93 billion on an actual currency basis.

The update comes as new lockdown restrictions have been announced across Europe, including in England which will see all non-essential retail once again shut their doors temporarily from Thursday.

Yesterday AB Foods said it expected Primark to lose £375 million worth of sales as a result of the second lockdown period from November 5 to December 2.

At the time of print, 19 per cent of Primark’s total global store estate across Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia were closed.

AB Foods said the new restrictions would have a “significant” impact on Primark, although it still expected sales and profits in the retailer during the current financial year to be higher.

It also highlighted that value of spring/summer stock being carried into the current year was “only some £150 million”, and that £1.25 billion worth of orders for autumn/winter have been made with suppliers.

“I am proud of how our people have responded to the many challenges presented by Covid-19,” AB Foods chairman George Weston said.

“Throughout, we have provided safe, nutritious food under the most extraordinary conditions, proving the value and resilience of our supply chains.

“Following a three-month closure, Primark delivered a robust performance, receiving an overwhelmingly positive response when it safely welcomed customers back to its stores.

“Uncertainty about temporary store closures in the short-term remains, but sales since reopening to the year-end of £2 billion demonstrate the relevance and appeal of our value-for-money offering.”

Speaking to PA Wires, AB Foods finance chief John Bason said the company expects “strong” demand when Primark’s stores reopen following the latest Covid-19 lockdown in England.

As a result, there is a chance they could extend their opening hours for Christmas shoppers when they can open their doors again.

“We are absolutely looking at longer opening hours,” he said.

“Safety will be paramount and our teams have worked very well to deal with demand and ensure queue management so will continue to work hard to adapt to demand ahead of Christmas.

“We’ve seen very strong sales over the past few days and would expect similar today and tomorrow.”

with PA Wires

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1 COMMENT

  1. They should bite the bullet and just start selling online they will have to at some point in the future they cannot put it off for ever. They were closed for 3 months over the first lockdown and made Zero profit. Even if they partnered with another retailer and sold on there like with Next or ASOS for example like many other brands do.

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