Covid-19 cost Primark an estimated £2bn in sales and £650m in profits as a result of Covid-19, its parent company said today.
All of the value fashion retailer’s sales stopped during the lockdown of non-essential retail between March 23 and June 15, since it does not sell online at all. But between reopening and the the end of its financial year in September it turned over another £2bn – and the retailer says that shows it remains relevant to shoppers.
Today Primark owner Associated British Foods (ABF) reported group revenue of £13.9bn in the year to September 12. That’s 12% down on the same time last year – and was mostly related to the total loss of sales at Primark for three months, which also spent £800m on Covid-related costs, including those of stock that had already been ordered when shops closed. Pre-tax profits of £686m were 42% down on last year.
At Primark alone, sales of £5.9bn were down by 24% on the previous year, while adjusted operating profit of £362m was down by 63% on the £362m. ABF estimates that sales were £2bn down on what it would have turned over, as a result of Covid, which had a knock on effect on profits – which it suggests would otherwise have been £650m higher. Primark is not listed in the RXUK Top500 as it does not sell online, but is covered by InternetRetailing as a useful comparison for multichannel and ecommerce retailers.
George Weston, chief executive of ABF, said: “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.”
Primark had a good first half of the year, in which it grew market share. Weston said Primark’s sales reflected the way that people were now living their lives, with higher sales in children’s and leisurewear and lower sales in formal menswear and travel accessories. Sales are higher at retail park stores compared to a year ago, while those on shopping centres and regional high streets are in line with last year. City centre stores, despite being reliant on tourism and commuters, have seen a “significant decline in footfall”.
Following store reopenings, it had returned to least its pre-Covid 19 level of sales. But by the time that English shops close for a month on Wednesday, 57% of its stores will again be shut.
Weston said: “Over the coming year Primark sales will continue to reflect the broader trend in consumer demand. The autumn/winter season and the run up to Christmas is important to the retail sector. Our stores have exciting seasonal ranges which are already proving a success with our customers. However, at the time of writing, governments are increasing the restrictions on the movement of people and trading activity. In some parts of Europe and the UK this has led to a reduction in trading hours or the temporary closure of stores. In England, temporary store closures are expected from 5 November. Uncertainty during a significant trading period remains.”
Elsewhere, ABF’s grocery business saw its sales and profits grow as higher retail sales offset a decline in catering sales.