London, United Kingdom – Primark’s sales have returned faster than expected since stores reopened after lockdowns, a boon to a discount fashion store that was hit hard by the corona virus crisis due to the lack of an online business.
Comparable sales from the UK chain have fallen by 12 percent since stores began reopening in other markets on May 4, owner Associated British Foods Plc said Thursday. Shoppers lined up outside Primark’s stores in Britain when they reopened last month, limiting loss of sales.
Shares rose to 8.4 percent in early London trading. So far this year they have fallen by 19 percent.
Primark reopened stores faster than expected, with 367 now operational and only eight closed, AB Foods chief financial officer John Bason said in a call.
“I think that outcome will pleasantly surprise some people,” he said. “We are also still opening new stores. We opened five this quarter and another five in the rest of the year, including two in the US. ”
AB Foods still expects Primark’s profit to fall by about two thirds this year as a result of the shutdowns. The UK conglomerate said the discount chain should generate adjusted operating profit of a staggering £ 350 million ($ 437 million) in the current fiscal year, compared to £ 913 million last year.
With Primark not selling through e-commerce, it was hit harder than rivals by the lockdown, with a 75 percent drop in revenue in the fiscal third quarter. The chain had a cash outflow of £ 800 million.
The conglomerate said sales at other divisions, including sugar, agriculture, groceries and food ingredients, offset some of the impact on its fashion business.
By Deirdre Hipwell.