// AB Foods expected to reveal that it missed out on £1.1bn in sales over the 6 months to February
// This will be because of the latest lockdown across its Primark stores
// AB Foods will provide an update to investors on Tuesday (April 20)
Associated British Foods (AB Foods) is set to unveil a slump in sales and profits after its Primark fascia was hammered by the latest Covid-19 lockdown.
The company is expected to reveal that it missed out on £1.1 billion in sales over the six months to February as a result of further enforced closures to its Primark stores, when it provides an update to investors on Tuesday (April 20).
However, many analysts are optimistic that AB Foods will recover ahead of the market.
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On Tuesday, shareholders will be keen to hear how Primark stores traded in their first week since customers were welcomed to stores again on Monday, April 12 – at least in England and Wales where lockdown has been lifted.
Unlike many competitors, Primark has not been able to trade at all in the UK since stores shut as it continues to stand firm on its bricks-and-mortar strategy and avoided ecommerce all together.
In February, the retailer said just over one fifth of its stores – 77 sites, primarily in the US – were still able to trade, but the recent reopening of some economies will help spark further sales in the current half-year.
AB Foods is expected to reveal sales of around £2.2 billion for the Primark business in the six months to February 27.
However, this will represent a stark slump against its £3.7 billion figure it posted for the same period a year earlier.
Analysts at Shore Capital said that, although there was still uncertainty surrounding the pandemic, they were positive the Primark format would “bounce back strongly”.
The equity experts were also positive about the “positive momentum” seen across AB Food’s food and ingredients businesses.
“AB Foods has shown remarkable agility and resilience through the pandemic and its excellent cash generative traits and strong balance sheet leave the Group very well placed for the future,” Shore’s Clive Black and Darren Shirley said.
AB Foods told investors in February that its grocery, sugar, agriculture and ingredients arms were expected to see revenues and profits ahead of expectations.
Shareholders will be hopeful that the resilience of AB Foods’ other operations will mean it will be able to pay out an interim dividend, having cancelled its last two payouts.
Analysts have pencilled in a 36p per share dividend, worth around £285 million, but this may depend on a positive outlook for Primark’s recovery.
with PA Wires