Retailer expecting to lose out on sales of £1.1 billion due to restrictions, but expects to be “highly cash-generative” when stores can finally open.
Primark is expecting a strong boost in sales once stores can finally re-open in April and pent up consumer demand can be met.
The retailer’s parent company, Associated British Foods, announced this morning (25 February) that it believes Primark will have lost out on sales of £1.1 billion as a result of the restrictions imposed due to the pandemic in the past six months.
A further £480 million hit to sales is also expected in the second half of its financial year, reported Retail Gazette.
However, sales in the six months to 27 February are still expected to come in at £2.2 billion (down from £3.7 billion the year before), as some overseas stores remain open as well as taking into account the sales periods before the latest lockdown restrictions were imposed.
Currently, 77 Primark stores are open worldwide (most in the US), which represents 22% of total store selling space.
Based on current estimates and government announcements for different countries, 83% of floor space will be able to welcome customers by 26 April.
Primark is expecting to re-open 153 stores in England on 12 April and a further 20 in Scotland by the end of the month.
In a pre-close period trading update, ABF said: “We expect the period after reopening to be very cash-generative. We expect to sell the £150 million of spring/summer inventory held over from last year, and our cash outlay in the second half for the coming autumn/winter season will mostly benefit from the £260 million autumn/winter stock held over from the first half.”
The company added that, when stores were open, trading had continued to be strong, with sales up 15% on a like for like basis compared with last year. However, performance did vary by store, reflecting consumers’ circumstances such as working from home, less commuting and little tourism.