Primark owner admits coronavirus could ‘increase risk’ of supply shortages

The owner of an international fashion retailer has spoken about the potential long-term effect of coronavirus on business.

Associated British Food, which owns Primark along with brands such as Twinings Tea, Ovaltine and AB Sugar, today reported its pre-close trading results, along with a warning about the recent outbreak.

The London-based company announced positive figures for Primark, with sales expected to be 4.2 per cent ahead of last year.

However, it noted that the company saw a 1.3 per cent decline in like-for-like sales.

Addressing the coronavirus outbreak, the business commented: “Primark sources a broad assortment of its product from China.

“We typically build inventories in advance of Chinese New Year and, as a consequence, are well stocked with cover for several months and do not expect any short-term impact.

“We are working closely with our suppliers in China to assess the impact on their factories and supply chains and their ability to fulfil our current orders.

“If delays to factory production are prolonged, the risk of supply shortages on some lines later this financial year increases.

“We are assessing mitigating strategies, including a step up in production from existing suppliers in other regions.”

Primark won’t be the only one of the company’s businesses affected, with the company also noting reduced capacity operations at AB Mauri, AB Agri and Ovaltine factories, which are based in China.