Primark owner set to confirm billion-pound sales blow from Covid

Primark owner Associated British Foods (ABF) is poised to report weaker sales after the high street fashion chain was hammered by the latest lockdown.

The group is next week expected to reveal that it missed out on £1.1 billion in sales over the six months to February as a result of further enforced closures to its stores, in an update to investors.

However, many analysts are optimistic that the firm will recover ahead of the market.

Shareholders will be keen to hear how Primark stores traded in their first week since customers were welcomed back to English stores, with queues forming outside many of them.

People queue outside the flagship Scottish Primark store on Princes Street in Edinburgh after it reopened following the initial spring 2020 lockdown. Picture: Jane Barlow/PA Wire

Unlike many competitors, Primark has not been able to trade in the UK since stores shut as it continues to stand firm on its bricks and mortar strategy.

Analysts at AJ Bell noted: “Such has been the pace of change in the Covid situation, with lockdowns and easings coming and going in the UK, Ireland, Europe and beyond, that AB Foods has felt obliged to issue no fewer than four trading updates since November’s full-year results.

“Primark was the biggest earner in the first half of last year, but it then fell into loss in the second half, while the other divisions – grocery, sugar, agriculture and ingredients – all showed improvements across the year as a whole.

“February’s trading statement flagged year-on-year increases in sales and profits at all four of those units again for the first half period, but then warned of a 40 per cent drop in sales at Primark to £2.2bn and the likelihood of an operating result near breakeven from the retail operation, which does not really have an online presence.”

In February, the retailer said just over one fifth of its stores – 77 sites – were still able to trade, but the recent reopening of some economies will help spark further sales in the current half-year.

Analysts at Shore Capital have said that, although there is still uncertainty surrounding the pandemic, they are positive that the Primark format is “set to bounce back strongly”.

“ABF has shown remarkable agility and resilience through the pandemic,” noted Shore’s Clive Black and Darren Shirley.

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