Primark boasts encouraging sales as it pulls out of the Coronavirus lockdown
- Primark boasts encouraging sales as it pulls out of the Coronavirus lockdown.
- The fashion retailer's annual profit is expected to drop by over 65%.
- Primark reopened all 153 of its England-based stores for the public in June.
Associated British Foods (LON: ABF) said on Thursday that its fashion subsidiary, Primark, has shown robust trading in recent weeks at its reopened stores. The prolonged COVID-19 restrictions, however, are still likely to result in an over 65% decline in the retailer’s annual profit. Primark currently lacks an e-commerce unit.
Shares of the company were reported more than 6% up in premarket trading on Thursday. At £20.7 per share, Associated British Foods is roughly 20% down year to date in the stock market after recovering from a low of £16 per share in March. It currently has a market capitalisation of £16.40 billion and a price to earnings ratio of 23.16.
Primark opened all of its England-based stores in June
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Primark currently has 375 stores in 12 different countries all of which were closed in March as the Coronavirus pandemic pushed governments into countrywide lockdowns. As of 15th June, all 153 of its England-based stores have now been reopened for the public.
Primark resumed operations at its first store on 4th May. In the seven weeks that ended on 20th June, as per AB Foods, cumulative sales came in at £322 million that marks a 12% decline versus last year on a comparable basis. AB Foods had estimated a 4.2% growth in Primark’s H1 sales in February.
For the week that ended on 20th June with over 90% of the retail stores having reopened, sales were reported at £133 million. In Ireland and England, Ab Foods added, trading was stronger on a year over year basis.
According to Primark, its full-year adjusted operating profit is likely to fall in the range of £300 million to £350 million in fiscal 2020 versus £913 million last year.
AB Foods grocery division reported a 9% sales growth in Q3
In the 40 weeks that ended on 20th June, AB Foods highlighted the total group revenue at 13% lower (constant currency) as compared to the same period last year. In terms of adjusted operating profit, the multinational food processing company forecasts a significant improvement at its agriculture, grocery, sugar, and ingredients businesses in fiscal 2020.
In the third quarter, its grocery division that includes prominent names like Jordans, Ovaltine, and Kingsmill noted a 9% growth in sales that helped to offset the hit to its foodservice businesses as COVID-19 pushed bars and restaurants into temporarily shutting down.
AB Foods now expects to conclude the ongoing financial year with over £750 million of net cash.