AB Foods cheered by Primark's record reopening after profit slump

LONDON (Reuters) -Associated British Foods reported a halving in first half profit after COVID-19 lockdowns shuttered its Primark fashion stores but said it saw record sales when they reopened.

The group, which also owns sugar, grocery, agriculture and ingredients businesses, said on Tuesday its adjusted profit before tax fell to 319 million pounds ($446 million) in the 24 weeks to Feb. 27 from 636 million a year earlier.

Group revenue fell 17% to 6.3 billion pounds driven by the loss of retail sales as most of Primark’s stores were closed for more than half the period.

Primark, which does not trade online, saw its adjusted operating profit slump 90% to 43 million pounds.

Shares in AB Foods were down 2.3% at 0809 GMT.

However, the group said Primark recorded record sales in England and Wales in the week after stores reopened on April 12.

“The reopening last week in England and Wales has gone fantastically well,” CEO George Weston told Reuters.

“Compared with the (end of the) last lockdown when we sold a lot of pyjamas and a lot of loungewear and a lot of underwear, this time the high sales have been across the categories with the exception of travel,” he said.

The group expects 68% of Primark’s retail selling space to be open by the end of April. It estimates it will lose sales worth 700 million pounds in its second half because of store closures, up from a previous forecast of 480 million pounds.

Weston said the group’s confidence was reflected in its decisions to repay to government 121 million pounds of job retention scheme support for the 2020-21 financial year and to declare an interim dividend of 6.2 pence. It cancelled the interim and full-year payments last year.

The group’s grocery division, with brands that include Kingsmill bread and Twinings tea, reported a 5% increase in profit, while higher prices drove sugar profit 450% higher. Profit for agriculture rose 19% and for ingredients 26%.

The group forecast a softer performance from its food businesses in the second half and expects full year profit for Primark to be “somewhat lower” than for 2019-20.

($1 = 0.7147 pounds)

Reporting by James Davey; editing by Sarah Young and Barbara Lewis