LONDON (Reuters) - Associated British Foods ABF.L has estimated the temporary closure of its Primark clothing stores in European markets due to new COVID-19 restrictions will cost it 375 million pounds ($484 million) in lost sales.
The group, which does not sell products online, said that as of Monday, all Primark stores in Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia would close temporarily, representing 19% of its total retail selling space.
It said that assuming the UK government’s intention to close all non-essential shops in England for one month from Nov. 5 to Dec. 2 is passed by lawmakers, 57% of its total selling space will be temporarily closed from Nov. 5.
Europe’s tough new lockdowns will hit non-food retailers hard, many of which make a large chunk of their annual profits in the so called “golden quarter” between Halloween at the end of October and the January sales.
Primark had been trading strongly after its stores reopened after a first wave of coronavirus lockdowns in the spring, achieving record UK market share. In September, the group had raised its profit forecast for Primark for the year to Sept. 12.
Primark does not sell online because the retailer does not consider this economically viable given the selling price of its products. During the spring lockdowns the group said it was not re-thinking its lack of an online business.
Full year 2019-2020 results for AB Foods, which also has major sugar, grocery, agriculture and ingredients divisions, will be published on Tuesday.
AB Foods’ shares were flat in early trading on Monday but are down 35% so far this year.
The group said it was implementing operational plans to manage the consequences of the latest Primark closures, including reducing operating costs.
But it said all orders placed with suppliers would be honoured. In July, the group said it expected to place more than 1 billion pounds of orders.
British rival Next NXT.L said last week a two-week lockdown in England, Scotland and Northern Ireland in November would reduce retail full-price sales by around 57 million pounds.
Reporting by Paul Sandle and James Davey. Editing by Jane Merriman
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