Primark annual sales and profits take hit from Covid-19

Primark has reported an annual drop in sales and profits following a tough year of Covid-19-related store closures.

For the 52 weeks to 12 September, revenue at the retailer fell 24 percent to 5.89 billion pounds, while its adjusted operating profit plummeted 60 percent to 362 million pounds.

The retailer, which doesn’t sell online, has been hit particularly hard this year by store closures as unlike many of its rivals it hasn't been able to offset sales losses through online channels. The company estimates it lost 2 billion pounds of sales and some 650 million pounds of profits linked to the pandemic.

Prior to the lockdown, however, sales in the first half of the year were 4 percent ahead of last year at constant currency.

Since reopening its stores post-lockdown, the company said it has “traded strongly with a low level of markdown”. In the UK, sales since reopening to the year end were 12 percent lower on a like-for-like basis - if the four large UK destination city centre stores are excluded, the decline was 6 percent.

Sales in Europe since reopening to the year end were 17 percent lower on a like-for-like basis, reflecting increased public health restrictions, particularly in Spain and Portugal.

Meanwhile, sales in the US since reopening to the year end were 10 percent lower on a like-for-like basis.

The threat of new lockdowns

The company is now worried about the impact fresh lockdowns will have on business as much of Europe faces new spikes in Covid-19 cases. On Monday, the retailer warned it could lose 375 million pounds due to new coronavirus lockdowns across England and Europe.

England will be launching its second lockdown on Thursday, with all non-essential retailers to close for a month.

“Following a three-month closure, Primark delivered a robust performance, receiving an overwhelmingly positive response when it safely welcomed customers back to its stores,” said George Weston, the CEO of Primark parent company Associated British Foods.

He continued: “Uncertainty about temporary store closures in the short-term remains, but sales since reopening to the year end of 2 billion pounds demonstrate the relevance and appeal of our value-for-money offering. We have the people and the cash resources to meet the challenges ahead and we are investing for the future.”

Photo credit: Primark