02 Nov Coronavirus: Primark warns of £375m hit from lockdown closures | Business News
The owner of Primark has warned that fresh coronavirus closures enforced on the discount fashion chain will result in a £375m hit from lost sales.
Associated British Foods (ABF) was among the first public companies to declare an expected loss as business counts the cost of toughening COVID-19 restrictions.
It said around 57% of Primark’s store estate would be shut down if Parliament approves plans to shut non-essential shops for a month in England from Thursday.
The store-only chain is particularly vulnerable to such restrictions as it has consistently refused to trade online and mitigate such a hit to its business coming, as it does, in the core Christmas trading period.
Sky News was seeking clarification on whether it was planning to tap the extended furlough scheme to help pay staff wages. Further details were expected in the group’s full-year results on Tuesday.
ABF said that all Primark stores in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia were already temporarily closed, representing 19% of selling space.
The company added that stores in some other countries were operating reduced hours.
“We are implementing the operational plans developed to manage the consequences of these closures and appropriate action will be taken to reduce operating costs.
“All orders placed with our suppliers will be honoured,” ABF said.
Shares fell 4% at the open with the likes of JD Sports and Next also among big retail names taking a hit.
ABF’s annual results are, however, expected to recognise only a limited impact on Primark’s sales because of a boost from pent-up demand in the wake of the first lockdown conditions across its key European markets.
Another high street operator to warn of a potential hit on Monday was the betting group behind Coral and Ladbrokes.
GVC said it expected a £34m dent to profits if its shops were forced to close during November as the government has planned.
The company said the impact from closures in other UK regions will be £27m and £10m from similar restrictions in other European countries already experiencing their own second lockdowns.
Its shares were 2% lower in early trading.