Primark ‘encouraged’ by trade since reopening but profits to plunge

Primark’s adjusted operating profit is likely to come in at between £300m and 350m this year, compared with £913m last year, parent ABF reported.

In the third quarter, Primark’s sales slumped 75% to £582m and in the year to date, they fell 27% to £4.3bn. 

All of Primark’s 375 shops in the UK and overseas were shut during the coronavirus lockdowns starting in March. As lockdowns ended, Primark said that ”stores have reopened more quickly than expected” and 367 are open to customers again.

ABF reported that ”trading in our reopened stores has in aggregate been reassuring and encouraging” although influenced by ”short- and medium-term factors”.

There has been strong demand in categories such as childrenswear, while menswear has been weak. Stores on retail parks have performed strongly but big city-centre shops have suffered from low commuter and tourist footfall.

Since stores began reopening in early May, cumulative sales in the seven weeks to June 20 were £322m – 12% down on the same period last year. Sales in the week ended June, 20 ”with over 90% of our selling space reopened” were ahead of the same week last year in England and Ireland. 

Primark, which does not sell online, has been in negotiations with landlords over rental payments while shops were shut. ABF said progress had been made and reported: “The discussions have been on a bilateral basis with each landlord as we have sought to share a fair proportion of the burden incurred during that time.

“Specifically, UK rent payments due for the six-month period of March to September have mostly been made, with the remainder payable shortly, with the amount and frequency by mutual agreement.”