The owner of Primark says it is placing over £1bn in orders for the autumn and winter season ahead following an “encouraging” start to coronavirus lockdown re-openings.
Associated British Foods (ABF) used a trading update to the City to paint a largely upbeat picture of Primark’s fortunes, despite recording a 75% slump in sales during its third quarter and forecasting a hit of almost two-thirds to the chain’s annual profits.
It comes as high street rivals announce thousands of job losses – with the parent firms of Topshop and even Harrods among those cutting staff on Wednesday alone.
It was unable to trade at all during that time because of its refusal to launch online.
All 153 stores in England resumed trading, in line with the easing of rules, on 15 June.
ABF said that since the re-opening of its first European stores on 4 May, sales on a like-for-like basis were just 12% down during the seven weeks to 20 June.
Sales in the week ended 20 June, which had more than 90% of total Primark selling space open, hit £133m with trading in England and Ireland ahead of the same week last year, ABF said.
It said its retail park stores had been particularly busy as pent-up demand among shoppers resulted in queues outside many outlets, though it admitted city centre shops had not proved as busy because of weak tourism and commuter activity.
The company said the fashion chain had already placed orders worth £800m for the looming autumn-winter season and that sum would exceed £1bn soon.
The company said: “Nearly all Primark stores are now trading again and we estimate that, absent a significant number of further store closures, adjusted operating profit for Primark, excluding exceptional charges, will be in the range £300-350m for the full year compared to £913m reported for the last financial year.”
ABF’s third quarter trading update showed group revenue from continuing businesses for the 40 weeks ended 20 June was 13% lower than the same period last year – with Primark’s woes partly offset by growth in its grocery and ingredients arms.
Shares – down 24% in the year to date – were almost 8% higher in early Thursday dealing after the trading update.
Pippa Stephens, retail analyst at GlobalData, said Primark’s value offer would help maintain its appeal in the months ahead.
She wrote: “Though Primark has severely suffered since the outbreak of COVID-19, as store closures and a lack of a transactional website forced it to suspend trading for nearly three months, its sales since reopening have been promising.
She added: “Since online penetration for clothing & footwear will remain strengthened in the long term as a result of the pandemic, Primark should rethink its bricks-and-mortar only strategy for the future, in order to mitigate the impact of reduced in-store sales densities and capitalise on spend shifting online.”
