Primark predicts £1.5bn sales drop

Primark-owner Associated British Foods (ABF) has estimated a decline in sales of £1.1 billion due to international store closures, predicting a further loss of £480 million in the second half of its financial year.

ABF said that it expects Primark sales during the six months to 27 February 2021 to hit £2.2 billion, compared to £3.7 billion in the previous year, with an adjusted operating profit marginally above break-even.

The Primark-owner said that its estimate for the sales loss in the second half of the financial year will hit £480 million, with a loss of contribution after cost mitigation of £170 million.

Last month the company underestimated potential losses, estimating a drop in sales worth £1 billion.

But the company said by 26 April, 83 per cent of its retail stores should be open and that it expects the period after reopening to be “highly cash generative.”

Toward the end of April Primark plans to open 233 stores, adding to the 77 stores that are already open.

“We expect the period after reopening to be very cash generative,” said ABF in its latest financial statement. “We expect to sell the £150m of spring/summer inventory held over from last year and our cash outlay in the second half for the coming autumn/winter season will mostly benefit from the £260m autumn/winter stock held over from the first half.”

Primark anticipates reopenings across a number of countries and cities over the coming weeks, including: six Spanish stores on 1 March and two on 11 March, 32 stores in Germany on 8 March and 20 stores in the Netherlands on 15 March.

Following the announcement by the UK Government on the 22 February the reopening of the 153 stores in England is likely on 12 April.

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