Primark looks to extend Christmas opening hours amid lockdown sales warning
Primark will take a sales hit of at least £375 million due to new lockdown restrictions but may extend opening hours for festive shoppers.
Bosses at the chain, which is owned by Associated British Foods (ABF) and is reliant wholly on in-store sales, have said stores could extend their opening hours for crucial Christmas trading when they can open their doors again.
ABF finance chief John Bason said the firm expects “strong” demand when stores reopen following the latest coronavirus lockdown in England. Scottish stores may be impacted if the Scottish Government decides on tighter restrictions in the weeks ahead.
“We are absolutely looking at longer opening hours,” Bason said. “Safety will be paramount and our teams have worked very well to deal with demand and ensure queue management so will continue to work hard to adapt to demand ahead of Christmas.”
The group said it will be affected by recently announced lockdown restrictions across Europe, which will see its English stores shut their doors temporarily from Thursday until at least December 2.
ABF said the new restrictions will have a “significant” impact on Primark, although it still expects sales and profits at the retailer during the current financial year to be higher.
It warned that the latest closures are expected to result in a £375m loss of sales ahead of the key festive trading period.
Adam Vettese, analyst at investment platform eToro, said: “Associated British Foods has shown impressive resilience given that it spent a significant chunk of the year without the contribution of one of its biggest revenue generators, Primark, to its bottom line.
“In fact, because it doesn’t have an online presence, ABF’s ‘golden goose’ turned into a cash burner overnight as sales fell effectively to zero.
“The worry now is that is set to happen again, as governments impose fresh lockdown restrictions across Europe. These restrictions are set to affect 57 per cent of its selling space and cost it an estimated £375m in lost sales.
“But for shareholders, now is not the time to push the panic button. Instead, they should look at the long-term outlook.”
Richard Hunter, head of markets at Interactive Investor, noted: “The group has already made reference to the second wave, where the imminent [English] lockdown is likely to result in 57 per cent of its store estate being shuttered at a cost to sales of £375m.
“This will be galling for retailers in general, particularly in the important lead up to the festive season, but if the lockdown is lifted as planned in early December, Primark will be well-positioned to pick up the reins for a hectic few weeks of trading.”
ABF told investors it lost around £800m from Primark during the three-month lockdown closure from March, as it continued to pay suppliers.
Nevertheless, it reported that sales gradually recovered after the closure period, with sales of children’s clothes, leisurewear and nightwear surpassing pre-Covid levels.
ABF reported that operating profit slid by 40 per cent to £810m for the year to September 12 after being weighed down by lower revenues.
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