Primark It lost 2 billion pounds in sales and 650 million pounds in profit as a result of the Coronavirus pandemic, contributing to lower annual profits for the retailer’s parent group.
Associated British Foods (ABF), which also owns Twinings tea, Kingsmill bread and Dorset beans, said sales at Primark were down 24% to £ 5.9 billion and profits slumped 62% to £ 362 million after the chain, which does not sell online, was forced into Closure for three months during lockdowns around the world. Primark was expected to reach a profit of £ 1 billion this year.
The retailer said on Monday that it expects to lose £ 375 million in sales during the next close, with 57% of its stores temporarily closed starting Thursday.
The troubles at Primark helped push ABF’s earnings down 42% to £ 686m in the year to 12 September, with revenue down 12% to £ 13.9bn despite strong performance from the grocery and sugar processing business.
George Weston, CEO of ABF, said Primark delivered “a strong performance, and received a very positive response when it welcomed customers safely into its stores”.
The company said it was able to sell its summer stock at minimal discounts as shoppers lined up to enter stores. It took £ 98m in vacation payments to employees in closed stores during the lockdown while other workers cut their pay, helping to cut overheads by half.
Sales of children’s clothing, comfort wear and pajamas rose above pre-Covid levels once stores reopened, but sales of men’s suits and luggage declined, reflecting work from home and travel restrictions.
Primark stores in the city center reported a “significant drop” in visitor numbers, but those in malls and regional high streets welcomed a similar number of shoppers in the past year once they were allowed to reopen.
Weston said ABF had the cash resources to see during its next shutdown. It canceled the final dividend but said it expected an increase in Primark’s sales and profits next year despite a possible difficult birthday.