Primark sees £375m sales hit as stores shuttered in second Covid wave

Primark owner Associated British Foods said it expected to lose £375m in sales as new Covid-19 lockdowns across Europe forced the closure of its stores.

The company on Monday shuttered all shops in Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia representing 19% of its retail space. Lawmakers in England are set on Wednesday to vote on a one-month lockdown which would see 57% of the store estate closed.

“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,” the company said in a statement.

"Trading hours are also restricted in a number of other markets. Uncertainty about further temporary store closures in the short-term remains."

It added that all orders placed with suppliers will be honoured.

At the year end AB Foods had net cash before lease liabilities of £1.5bn and total liquidity of £3.1bn including lending facilities. The company, which also runs grocery and ingredients businesses, said it still planned to publish annual results on Tuesday.

Hargreaves Lansdown analyst Susannah Streeter said the company "may well regret its resistance to creating an online presence, as it can't make up the shortfall in digital sales".

"It's easier for the company to assess the potential damage given that Primark sales took a huge hit earlier in the year during the first lockdown."

"Pent up demand for fashion saw customers flood back in the summer but that profit would be wiped out, if doors are locked during the key Christmas period. The group's food orientated operations could benefit from consumers being stuck at home again, opting for trusted brands, but ABF's substantial cash pile will come in very handy if Primark's business takes this big hit. ''