Primark sales plunge by £1.5bn but chain ‘expects to break even’

Sales at Primark have dropped £1.5bn while its shops have been closed during the pandemic, but the fast-fashion retailer predicted a surge in shoppers when the high street reopens.

John Bason, the finance director of Primark’s parent company, Associated British Foods (ABF), said the UK’s vaccination programme would encourage people back to its shops in greater numbers when the current lockdown ended and non-essential retailers were allowed to reopen, from no earlier than 12 April.

“We will come back strongly,” he said. “The game changer for me is the vaccine. In the first reopening there was a reluctance by a good part of the population to be going out and about. The vaccine has changed that.”

After a year of not buying certain kinds of clothing – for work, nights out and special occasions – Bason said the evidence from Austria, where Primark reopened stores three weeks ago, was that sales would be ahead of last year as shoppers bought a broader range of clothing than last summer. “Probably the worst is behind us,” he said.

The optimistic forecast comes after ABF estimated Primark would sell £2.2bn of goods in the 24 weeks to 27 February, £1.5bn lower than the equivalent period in the year before.

Health concerns and restrictions on travel meant that even when shops were open they reported a 15% decline in like-for-like sales. City-centre stores were hit by a lack of commuters and tourists, while stores in out-of-town retail parks sold clothes faster than before the pandemic.

ABF’s interests in groceries, sugar and agriculture increased sales and profits in the past six months, but the pandemic has pummelled its money-spinning Primark chain, with further pain to come. ABF said it expected a further £480m in lost sales at the fashion chain during the next six months as temporary store closures continue.

However, the company said it expected Primark, which does not sell its products online, to break even narrowly on an adjusted measure of profitability over the last six months.

It hopes to save cash over the next six months partly by selling £150m of stock held over from last spring and summer. Another £260m of stock from autumn and winter 2020 is being held over for this year’s chillier seasons.

Primark’s 153 stores in England will reopen on 12 April if all goes to plan. By 26 April, 83% of Primark’s shop floorspace should be up and running l compared with less than a quarter on Thursday.

The group plans to launch 15 new stores this year, including three in the US and five in Spain, and has also signed two additional leases on shops in New York state and three in Spain.

Bason said that while Primark was unlikely to open additional stores in the UK, it had got “white space to move into” around the world, and the demise of some other retailers during the pandemic had provided “big nice opportunities” to pick up stores, particularly in mainland Europe.

Primark has resisted pressure to invest in an online shop, a strategy that had – until the coronavirus pandemic – appeared to pay off with big profits. Since then, however, its stores have been hit by months of closures and restrictions across its main UK and European markets.

ABF added that it had not suffered any material disruption from the UK’s exit from the EU’s single market at the start of the year across any of its businesses.