Primark owner warns of 1.6 billion pound sales hit from lockdowns

LONDON (Reuters) - Primark-owner AB Foods warned that lost sales from COVID-19 lockdown store closures would amount to 1.58 billion pounds ($2.23 billion) but said it expected strong trading when they reopened.

FILE PHOTO: Signage is displayed outside a Primark store at the Oxford Street, in London, Britain July 2, 2020. REUTERS/Hannah McKay

The group, which does not trade online, said it estimated Primark’s lost sales would be 1.1 billion pounds in the first six months of its financial year to Feb. 27 and 480 million pounds in its second half as restrictions loosened up.

Primark, which has outlets in Britain and several other European states, had 77 stores open on Thursday, or 22% of its retail selling space. By the end of April, it aims to have 310 stores open, or about 83% of its retail space.

“We know that people will welcome us back when we reopen,” finance chief John Bason said. “There is pent-up demand.”

In the past few weeks, Primark stores in Austria, Poland and Slovenia had reopened and were delivering like-for-like sales ahead of last year’s pre-COVID levels, he told Reuters.

Shares in AB Foods were up 0.4% at 0952 GMT, valuing the group at 19.2 billion pounds.

The group expects Primark’s first half sales to be about 2.2 billion pounds, down from 3.7 billion pounds, and adjusted operating profit to be marginally above break-even versus a profit of 441 million pounds.

Primark’s performance meant the overall group’s first half sales and earnings would be lower than the previous year, the company said.

AB Foods has a grocery division, with brands that include Kingsmill bread and Twinings tea, as well as major sugar, agriculture and ingredients businesses.

It forecast revenue and profit in all of these units to be ahead of both expectations and the first half of last year.

Despite the pandemic, the group has continued to open new Primark stores. Six opened in the first half and nine are planned for the second half.

($1 = 0.7070 pounds)

Reporting by James Davey; Editing by Kate Holton and Edmund Blair