ABF profit slumps as Primark hit by £2bn loss

Associated British Foods, the parent company of Primark, has announced that statutory operating profit tumbled 40% to £810m in the full-year ended 12 September 2020. 

In the same period, group revenue fell by 12% to £13.9bn following the impact of the ongoing pandemic. 

The full year decline in group revenue was mainly seen in the third quarter, driven by the total loss of sales for the period in which Primark’s stores were closed. 

Its parent company now estimates that Primark lost £2bn of sales and some £650m of profit as a result of Covid-19 in its full-year of trading. 

It comes after ABF warned that Primark could see a £375m hit to sales following the second wave of lockdowns across the UK and Europe.

All Primark stores in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia have temporarily closed, representing 19% of its total retail selling space. 

In light of the UK Government announcing its intention to close non-essential shops in England from 5 November to 2 December, 57% of its total selling space will be temporarily closed from the start of lockdown.

The estimated £375m loss comes as a result of closures across all aforementioned markets.

George Weston, CEO of Associated British Foods, said: “I am proud of how our people have responded to the many challenges presented by COVID-19. Throughout, we have provided safe, nutritious food under the most extraordinary conditions, proving the value and resilience of our supply chains. 

“Following a three-month closure, Primark delivered a robust performance, receiving an overwhelmingly positive response when it safely welcomed customers back to its stores.” 

He added: “Uncertainty about temporary store closures in the short-term remains, but sales since reopening to the year end of £2bn demonstrate the relevance and appeal of our value-for-money offering.

“We have the people and the cash resources to meet the challenges ahead and we are investing for the future.”