Primark reports profits hit by COVID lockdowns
Primark has announced revenues dropped 24% to £5.9 billion for the 52 weeks to 12 September 2020, largely driven by a total loss of sales for the period in which stores were closed as a result of government restrictions. Adjusted operating profit fell 63% during the period to £362m.
Sales in the first half of the year were reportedly 4% ahead of 2019 at constant currency driven by the increase in retail selling space and supported by a substantial improvement in like-for-like sales in continental Europe.
All stores reopened by mid-July and since reopening, having traded strongly with a low level of markdown. Primark estimates that sales were some £2 billion lower as a result of COVID-19.
In the UK, sales since reopening to the year end, were 12% lower on a like-for-like basis and if the four large UK destination city centre stores are excluded the decline was 6%.
Sales in Europe, since reopening to the year end, were 17% lower on a like-for-like basis, reflecting increased public health restrictions, particularly in Spain and Portugal.
The UK Government has announced its intention to close non-essential shops in England for one month from 5 November to 2 December. Primark estimates 57% of its total selling space will be temporarily closed from 5 November, with an estimated loss of sales of £375 million.
George Weston, Chief Executive of Associated British Foods, said: “I am proud of how our people have responded to the many challenges presented by COVID-19. Our food businesses delivered an adjusted operating profit increase of 26%, driven by high demand and improved productivity.
“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.
“We have the people and the cash resources to meet the challenges ahead and we are investing for the future.”