Primark warns of challenging store reopening process post-coronavirus

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Value fashion giant Primark has signalled that reopening stores after the coronavirus pandemic is likely to be a “complex” process to ensure the health and safety of staff and shoppers.

The retailer is likely to recover about 50% of operating costs sustained during the outbreak, parent company ABF reported. That leaves the retailer with a monthly cash outflow of about £100m while shops remain shut.

In an emotional personal message accompanying ABF’s first-half results, chief executive George Weston paid tribute to group employees who have died from Covid-19 and said that it was essential to put beating the pandemic ahead of business considerations.

Weston said: “Much as I would love to be allowed to reopen Primark stores across the UK, continental Europe and the USA soon, because lockdown has so harmed our business and our supply chains, I know that we must not do so until we have suppressed this disease.

“And when we are allowed to reopen we must make our Primark stores safe for our staff and our customers, even if that means ensuring there are fewer people shopping at any one time and so accepting lower sales, at least until the remaining risk is minimal. In time we can rebuild the profits. We can’t replace the people we lose.”

ABF chair Michael McLintock said that, while “there was very little effect of Covid-19” on ABF’s first half, during which Primark’s adjusted operating profit edged down 1% to £441m on sales up 4% to £3.71bn, “trading in our second half will be radically different”.

Since the end of the first half on February 29, many countries in which Primark trades, including the UK, have gone into lockdown and the retailer’s shops are shut.

ABF reported: “The timing of the reopening of the stores remains uncertain; moreover, the process of reopening, once it begins, is likely to be complex. As a result, it is too early to provide earnings guidance for the remainder of the current financial year.”

Through accessing various government schemes across Europe, and as a result of measures such as negotiating lease terms with landlords and cost-cutting, Primark has been able to mitigate the financial impact of lockdowns by about half, ABF reported.

Weston said he was “in awe of the Primark teams for their care, good judgement and immense hard work as they have managed this crisis”.