Primark has posted falls in both its full-year profits and sales blaming the closure of its store estate during the third quarter in a bid to stem the spread of the coronavirus.
The value fashion chain’s owner Associated British Foods (ABF) said operating profits at the retailer for the year ending September 12 slumped 60% to £362m.
Revenues fell 24% to just over £5.8bn, with store sales in the UK down 12% and 17% across its European estate since reopening from the first lockdown.
Sales since reopening in the US have been down 10% year on year, although Primark said excluding its Boston city centre store sales were level with last year.
The retailer’s operating profit margin slipped to 6.1%, down from 12% in the last financial year.
Primark’s results also laid bare the effect the virus has had on city centres with more people working from home and not travelling. ”Our 16 largest destination city centre stores contributed 13% of total sales pre-Covid-19 and 8% of sales after reopening.”
As of today, Primark said 19% of its international store estate across the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia are temporarily closed.
With England poised to go into another full lockdown from midnight on Thursday, Primark said yesterday it expected to lose £375m in sales from November 5 to December 2.
Despite the huge disruption caused by the coronavirus, Primark said it managed to open 12 new stores in the year, bringing its total store estate to 384 globally.
Primark said it expected to add 0.7 million sq ft of store space in the next financial year, despite the effects of the virus.
The retailer said the value of spring/summer stock being carried into next year is “only some £150m” and that £1.25bn worth of orders have been placed with suppliers for autumn/winter stock.
ABF chief executive George Weston said of Primark’s performance: “Following a three-month closure, Primark delivered a robust performance, receiving an overwhelmingly positive response when it safely welcomed customers back to its stores.
“Uncertainty about temporary store closures in the short-term remains, but sales since reopening to the year end of £2bn demonstrate the relevance and appeal of our value-for-money offering.
“We have the people and the cash resources to meet the challenges ahead and we are investing for the future.”
Looking ahead, chair Michael McLintock said: “Notwithstanding the currently announced periods of restriction, we expect Primark full-year sales and profit to be higher next year.
“There will be a sales decline in the first half compared with last year but higher sales in the second half, reflecting the period of store closures in the third quarter of this financial year. We will continue to expand retail selling space.”
Hampered by Primark’s performance and the coronavirus, ABF posted a 12% downturn in revenues to £13.9bn and a 31% fall in operating profits to just over £1bn.
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