Primark owner AB Foods has warned of the impact the coronavirus could have on supply for the retailer if disruption caused by the epidemic in China is prolonged.
In a pre-close trading update, AB Foods said while the clothing retailer was “well stocked” in the short-term, if delays to factory production are prolonged the “risk of supply shortages” on some of its lines later in the financial year “increases”.
“We are assessing mitigating strategies, including a step up in production from existing suppliers in other regions,” it added.
The news comes as it revealed half-year sales at Primark are expected to be 4.2% ahead of last year at constant currency, driven by “increased retail selling space” and level like-for-like sales.
However, it added that operating profit is expected to be marginally down on last year at constant currency and on a lease-adjusted basis. On a reported basis operating profit will be ahead of last year.
In the UK, clothing sales are expected to be 3% ahead of last year, driven by a “strong contribution” from new selling space but was partially offset by a 1.3% decline in like-for-like sales.
AB Food added that trading was “particularly good” over November and December but weakened in January and February against “very strong comparatives” in the prior year.
