Primark revenue and profits hit by store closures

Primark has reported a drop in half-year sales and profit as Covid-19-related store closures continue to impact the retailer.

The fast-fashion giant’s revenue fell 40 percent to 2.23 billion pounds for the six months to February 27, with the majority of its stores closed for more than half of the period. Unlike many of its rivals, Primark doesn’t have a webstore to offset sales losses from its physical stores.

Adjusted operating profit plummeted 90 percent to 43 billion pounds.

Primark’s parent company, Associated British Foods (ABF), reported a 17 percent drop in group revenue to 6.31 billion pounds, while its adjusted operating profit fell 46 percent to 369 million pounds.

But Primark said it considers its like-for-like performance to be “strong” considering there was lower category spend, lower footfall and trading restrictions when stores were open.

Like-for-like performance in the UK was -6 percent in the first half and -1 percent excluding four major city-centre stores. Like-for-like performance in the Eurozone was -20 percent, due to Covid restrictions and, in some cases, the limitation of merchandise Primark was permitted to sell.

Primark upbeat on reopened stores

The retailer said its US business “performed well” and is now profitable. Like-for-like sales performance was -11 percent or -3 percent excluding the city centre Boston store.

In line with the company’s expected reopening dates, Primark now expects to make a sales loss linked to store closures in the second half of the year of 700 million pounds.

ABF CEO George Weston was upbeat on Primark’s performance and hailed “record sales” in England and Wales since stores in the countries reopened last week.

“With our success in a number of new markets, as wide-ranging as Poland and Florida, we are as convinced as we have ever been in the long-term growth prospects for Primark,” he said in a statement.

“Looking ahead, with stores reopening and Primark once again becoming cash generative, our confidence is reflected in our decisions to repay the job retention scheme monies in respect of this financial year and to declare an interim dividend.”