// Primark owner AB Foods warns of a £1.05bn hit from lost retail sales if Covid lockdowns remain until the end of February
// This is up from the £650m hit forecast at the end of December
// Sales plunged 30% in the 16 weeks to January 2 & Primark’s profits expected to “break even” this year
Primark parent company AB Foods has warned of a hit from lost retail sales of more than £1 billion if Covid lockdowns force its stores to stay closed until the end of February.
The budget fashion retailer said 305 of its 389 shops around the world are currently shut, which is expected to cost it £1.05 billion in lost sales – up from the £650 million hit forecast at the end of December.
AB Foods – which operates 190 Primark shops in the UK – said it now expects to see half-year underlying earnings wiped out, with the firm forecasting to be “broadly break-even” against profits of £441 million recorded last year.
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However, it said it could be facing a £1.85 billion sales impact if its entire store estate has to close and remain shut until the end of March, knocking profits by a further £300 million.
Primark has already seen £540 million in lost retail sales from store closures due to Covid restrictions in its key Christmas quarter, with sales slumping 30 per cent in the 16 weeks to January 2.
AB Foods said it saw trade badly impacted by the November lockdown in England and restrictions across Europe, given that it does not sell online.
Current shop closures account for around 76 per cent of its retail selling space.
The firm also said it has been able to offset some of the trading impact with overhead costs cut by 25 per cent due to store closures.
“The impact of store closures on Primark’s performance is significant,” AB Foods said.
“We now expect full year sales and adjusted operating profit for Primark to be somewhat lower than last year.”
The firm said trading was strong while stores were open, with like-for-like sales declines running at 14 per cent in the 16-week period.
Stores at retail parks accessible by car lifted on a year earlier, but high street and shopping centre sites were badly impacted by the pandemic.
Despite the woes, it opened another five shops over its festive quarter and pledged to “continue to expand retail selling space”.
with PA Wires