Primark reports “encouraging” trading after reopening stores

Primark owner Associated British Foods has reported that sales at the retailer dropped by 75 percent to 582 million pounds in the third quarter to June 20 due to the coronavirus lockdown, however, trading since stores reopened has been "reassuring and encouraging”.

The budget fashion and homeware retailer estimates that it lost 650 million pounds in sales per month during the Covid-19 lockdown after all 375 of its stores closed in a 12-day period to March 22.

Due to the ongoing coronavirus crisis, full-year operating profits at Primark will be in the range of 300-350 million pounds, compared with 913 million pounds reported for the last financial year, added Associated British Foods.

Since the retailers last trading update on June 1, it states that stores have reopened “more quickly than expected,” particularly in Ireland. On June 15, Primark reopened 179 stores, representing nearly half of its estate, across four markets along with a new store in Trafford Centre.

As of today, July 2, 367 Primark stores have reopened with the remaining eight stores it added expected to “follow in the near future”. However, the retailer has also had to temporally close its two stores in Leicester due to the government’s local lockdown in the city.

Primark sales down by 75 percent in third quarter due to Covid-19 lockdown

With regards trading since reopening, Primark expressed that it has been "reassuring and encouraging", driven by consumer demand for childrenswear, leisure and nightwear, along with summer products such as shorts and T-shirts.

Regional stores, particularly those located in retail parks are performing well, however, Primark added that stores in big city centres are “suffering” from the absence of tourism and much lower commuter footfall.

Since the reopening of the first stores on May 4 in Austria, cumulative sales for the seven-week period to June 20 were 322 million pounds, down 12 percent compared to the same period last year on a like-for-like basis.

Sales in the week to June 20, when 90 percent of its stores had reopened, were 133 million pounds, and trading in England and Ireland “were ahead of the same week last year”.

Primark secures rent deals with landlords, and places more than 800 million pounds in orders for autumn/winter

In addition, Primark added that it has “made progress" with landlords to secure agreements on rent payments for the period when it wasn’t trading. These discussions it noted were on a “bilateral basis with each landlord as we have sought to share a fair proportion of the burden incurred during that time”.

UK rent payments due for the six month period from March to September have “mostly been made”, with the remainder payable shortly, with the amount and frequency by mutual agreement.

Primark is still pushing forward with its retail expansion, with five new stores expected to open in the remainder of the current financial year, in Warsaw, Poland, two in Paris, France, as well as stores in the American Dream shopping centre in New Jersey, and in Sawgrass Mills, Florida, which will take the retailer’s store count in the US to eleven stores. However, the retailer did add that the US openings will rely on the lifting of local Covid-19-related restrictions on retail.

The budget retailer also noted that now its stores are trading again that it has placed orders worth over 800 million pounds for the autumn/winter season and, added that further orders would “be placed shortly”, and that they expect the total for the coming season to exceed 1 billion pounds.

Image: FashionUnited