Primark has revealed it is withholding its quarterly rent on closed stores, in a bid to negotiate a deal with landlords that could help mitigate financial losses amid the UK lockdown.
According to the Guardian, the payment was meant to cover rent and service charges for a large majority of its UK estate for the next three months. Primark does not sell online, meaning sales will be wiped out by the store closures.
It comes after Primark owner Associated British Foods (ABF Foods) saw its shares dive in early trading on 16 March after it announced that the closure of its European stores due to coronavirus could leave a hole of £190m in sales.
However, since then the retailer has seen all stores in the UK close, which represented 41% of sales, and all 376 stores in 12 countries have also closed “until further notice”. ABF said this represents a loss of some £650m of net sales per month.
The group said a variety of work streams have now been established to “mitigate” the effect of the contribution lost from these sales and all expenditure is “being reviewed”.
A statement by ABF read: “In the first instance we have implemented a significant reduction in discretionary spend.
“We are making good progress in also reducing fixed costs following discussions with counterparties, in particular landlords, and welcome the recently announced government support in the countries in which our stores operate. As a result, we currently estimate being able to recover some 50% of total operating costs.”