Primark Owner Warns of £1.5 Billion Sales Hit if Lockdowns Last Through March

Primark-owner AB Foods warned that the loss of sales from store closures could rise to over 1.5 billion pounds ($1.36 billion) if current lockdowns last until the end of March, but the group is confident of strong growth upon reopening.

Unlike most rival retailers, which continue to trade online during lockdowns, Primark does not have an online shop meaning lockdowns in its main UK market and elsewhere in Europe have halted sales as 76% of its retail selling space is shut.

AB Foods said in a statement that if all those stores stayed shut until Feb. 27, then the loss of sales would reach some 1.05 billion pounds, a 55% jump from Dec. 31 when it warned of a 650 million pound loss.

Finance director John Bason said that the hit would rise by an extra 500 million pounds if the pandemic kept all those stores closed until the end of March.

He declined to say when he expected lockdowns to end, but said he was confident on future growth.

“I think people will come flooding back to the stores when we reopen,” he said.

“We’ve come through two lockdowns and we’re traded really well after both of them.”

Following England’s November lockdown, the group said Primark trading was “phenomenal”.

AB Foods, which has suspended group earnings guidance due to the pandemic, said that it now expected Primark’s adjusted operating profit to be “somewhat lower than last year”, downgrading a December forecast for it to be higher.

Shares in AB Foods traded down 0.8%. They have lost 14% of their value over the last 12 months.

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

Those units were performing strongly, it said on Thursday, with home baking and high demand for supermarket goods driving growth and it expected their adjusted operating profit to be “well ahead of last year”.

Brexit had not caused any material disruption to its supply chains, AB Foods added.

By Sarah Young. Editors: Paul Sandle, Estelle Shirbon and David Evans.