Second national lockdown wipes £430m off Primark’s balance sheet
England’s second national lockdown wiped an estimated £430m off Primark’s balance sheet, as the pandemic continues to decimate British high street retailers.
Speaking ahead of Primark’s annual general meeting later today, chairman Michael McLintock said: “Our estimate for the loss of sales for the announced periods of closure this autumn is now some £430m.”
The figure comes in much worse than expected, after Primark owner Associated British Foods (ABF) last month predicted a £375m hit from England’s second national lockdown.
A ban on non-essential shops during the month-long restrictions meant the group was forced to shutter the bulk of its estate.
The store-only chain has proven particularly vulnerable to nationwide lockdown measures, having consistently refused to bolster trading with an online presence.
All of Primark’s stores in England, the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia were temporarily closed last month, representing 62 per cent of its total selling space.
McLintock made efforts to calm investors this morning, saying sales had been “very strong” since the group reopened its stores in major markets last week.
Freshly reopened Primarks across the UK saw round-the-block queues on so-called Wild Wednesday earlier this week, as British shoppers hit the high streets for the first time in 27 days.
Shares rose 2.2 per cent to 2,355p at market open despite the worse-than-expected lockdown hit.
However, 34 Primark stores around the world remain temporarily closed, including all stores in Northern Ireland and Austria — representing around seven per cent of the group’s portfolio.
Primark earlier this year expanded its presence across the Atlantic, opening five new stores across the US, as well as a new site in Rome last week.
McLintock said the success of Primark’s US stores and like-for-like sales in its reopened stores was “very encouraging”.
“Notwithstanding the currently announced periods of restriction, we continue to expect Primark sales and profit to be higher this financial year compared to last,” he added. “We will continue to expand retail selling space.”
It comes after a devastating week for Britain’s struggling high street, which saw retail staples Debenhams and Arcadia buckle under the weight of the second national lockdown.
Debenhams on Tuesday announced it will permanently close down after administrators were unable to find a buyer.
The department store’s collapse, which put around 12,000 jobs at risk, came after the collapse of high street empire Arcadia prompted JD Sports to pull out of sales talks.
Topshop-owner Arcadia, owned by retail tycoon Sir Philip Green, appointed administrators on Monday after the pressures of the pandemic proved too much for the high street chain. Between them, the two retailers employ around 25,000 people.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The cost of the latest lockdown was the final nail to hammer ABF’s competitor Arcadia, pushing it into administration. So it comes as little surprise that the Primark owner now says the forced shuttering of stores was an even bigger hit to sales than first forecast.
“Remarkably, despite this sizeable hole in revenues, ABF still expects to profits to reach higher levels than last year. At a time when rivals on the high street like Topshop, Debenhams and Bonmarche face being wound up or sold, Primark is proving highly resilient.”