Primark’s reopening is helping to recover retail losses

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Primark. Shutterstock.

Associated British Foods reported a halving of its profits in the first half after the Covid-19 lockdowns closed the closure of its Primark fashion stores, but said it saw record sales when they reopened.

The group, which also owns sugar, grocery, agricultural and ingredients businesses, said on Tuesday that its adjusted pre-tax profit fell to £ 319 million ($ 446 million) from £ 636 million in the 24 weeks to February 27. years earlier.

Group sales fell 17 percent to £ 6.3 billion due to the loss of retail sales, as most Primark stores were closed for more than half of the period.

Primark, which does not trade online, saw its adjusted operating profit drop by 90 percent to £ 43 million.

Shares of AB Foods fell 2.3 percent at 08:09 GMT.

However, the group said Primark had record sales in England and Wales in the week after the stores reopened on April 12.

“Last week’s reopening in England and Wales went fantastically well,” CEO George Weston told Reuters.

“Compared to (the end of the) last lockdown, when we sold a lot of pajamas and a lot of loungewear and a lot of underwear, this time sales were in all categories except travel,” he said.

The group expects 68 percent of Primark’s retail space to be open by the end of April. It estimates it will lose revenues of £ 700m in the second half due to store closings, up from an earlier forecast of £ 480m.

Weston said the group’s confidence was reflected in its decisions to repay the government £ 121 million in job retention aid for the 2020-21 fiscal year and to issue an interim dividend of 6.2 pence. to turn. Last year, it canceled the interim and full annual payments.

The group’s grocery division, which includes brands like Kingsmill bread and Twinings tea, reported a 5 percent increase in profit, while higher prices boosted sugar profit by 450 percent. Profits for agriculture increased by 19 percent and for ingredients by 26 percent.

The group forecasts a weaker performance of its nutrition business in the second half and expects full-year earnings for Primark to be “slightly lower” than 2019-2020.

By James Davey; Editor: Sarah Young and Barbara Lewis