Primark owner reveals gloomy outlook amid coronavirus crisis
- Credit: Copyright: Archant 2020
Shares in Associated British Foods were today suspended after it revealed a bruising report into the effects of coronavirus on its business.
AB Foods – which owns Primark – said it had been forced to close stores across Europe accounting for nearly a third of its sales.
Stores in France, Spain and Austria, which had been expected to make sales of £190 million over the next four weeks, were among the closures.
They represent about 20% of Primark’s selling space around the world.
As it stands there is no suggestion British stores – including the flagship Norwich stores in Haymarket – will be forced to follow suit but the retailer could not rule it out.
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The coronavirus outbreak has seen sales falling in the UK, where Primark makes 41% of its sales. Like-for-like sales have declined over the last two weeks and these have accelerated over the past few days as a result of reduced footfall as people stay away from the high street, it stated.
“We are managing the business appropriately but do not expect to significantly mitigate the effect of the contribution lost from these sales,” AB Foods said.
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There was happier news from China. In February Primark had warned that its factories there were closing, which could have a knock-on effect on its supply chain. However most of the factories which supply it have now re-opened, the company confirmed.
“As a result, supply shortages from that country are now expected to be minimal,” AB Foods said in a statement.
The company added: “Our priority continues to be the health and safety of our colleagues, customers and partners.
“Each of our businesses are closely monitoring the current and potential effects of the outbreak on their operations.”
AB Foods said that in the first half of the financial year adjusted operating profit would be ahead of previous expectations, as Primark racked up better margins. The group will provide a further update with interim results on April 21.