Penneys owner takes €474m hit from lockdown closures

business
Shoppers outside a Primark store. Photo: PA Wire/PA Images
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By Simon Neville, PA City Editor

Penneys owner Associated British Foods (ABF) has revealed that the second national lockdown in England, along with regional lockdowns and restrictions, has hit sales to the tune of £430 million (€474 million) – higher than previously expected.

But the company said it has recovered some of the costs, with overheads falling 25 per cent during the autumn lockdowns, and early signs that reopened stores are seeing strong sales.

Customers at Primark, the store's brand name outside of Ireland, have been eager to buy clothes again and long queues have formed at some branches in England as shops reopened again on Wednesday.

To maximise sales and spread out customer numbers, some sites have continued trading through the night, while others have extended opening hours.

ABF said 34 stores remain temporarily closed, including all outlets in Northern Ireland and Austria, representing 7 per cent of Primark’s total retail selling space.

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This compares with 62 per cent when the highest number of stores were closed in November. Last month bosses had predicted sales would be hit by £375 million.

Stores in the Republic, France and Belgium reopened in the past week.

Long queues formed outside Primark stores as lockdown restrictions in England lifted on Wednesday. Photo: Owen Humphreys/PA

The company’s chairman, Michael McLintock, said: “Sales in the days since reopening in each of these markets have once again been very strong, reflecting the excitement and appeal of the Primark offering.

“We have extended the opening hours during this festive season in most of our stores in the Republic of Ireland and England to cater for the anticipated higher customer demand and to help ensure a safer environment by spreading shopping hours over a longer period.”

His comments, due to be made at the company’s annual shareholder meeting, also included an update on post-Brexit transition plans, saying preparations are complete.

He said: “Following the UK’s exit from the EU, our businesses have completed all practical preparations for the end of the transition period this month and contingency plans are in place should our businesses experience some disruption at that time.”

Since the start of this financial year, new stores have been opened in the US – in New Jersey and Florida – with “encouraging” performance from its remaining sites.

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Strong sales were also seen in the company’s first store in Rome in Italy, and a fifth site was opened in Barcelona, Spain.

He said: “Notwithstanding the currently announced periods of restriction, we continue to expect Primark sales and profit to be higher this financial year compared to last. We will continue to expand retail selling space.”

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ABF also owns a number of grocery brands, a sugar business and agriculture division, which have performed well.

However, the company said its forecast for UK sugar production for 2020/21 is now 0.9 million tonnes – lower than previously expected.

This is down from 1.19 million tonnes, due to the severe impact of virus yellows disease on sugar beet, it added, although profits are likely to remain strong.

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