Primark set to see losses of more than £1bn as "uncertainty" rises
A UK fashion brand has reported that it is set to see losses of more than £1bn for the financial half year.
Primark, which is owned by Associated British Foods (ABF), said today that it had shifted its predictions for this half of the year from a £650m loss of sales to £1.05bn.
The losses are due to temporary store closures under coronavirus lockdown restrictions, with 76 per cent of the brand’s locations closed worldwide.
However, it said that it is saving 25 per cent on operating costs of closed stores, which it believes will “break even” its operating profit.
The company said that if stores remain closed until the end of March, it predicts that it will see a further £0.8bn of losses.
In today’s report, ABF said: “The uncertainty about store closure periods in the short term has increased.
“Making the assumption that all of the stores currently closed remain closed until the financial half year, at 27 February 2021, the loss of sales caused by temporary store closures would reach some £1.05bn.
“This is up from our previous estimate, based on announced closure dates, of £650m communicated on 31 December.
“Under the scenario that the entire estate is closed imminently, and remains closed until the end of March, we would expect to see over the three month period a further loss of Primark sales of some £0.8bn, and a consequent reduction in profit contribution of some £0.3bn.”
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