Primark has announced that the closure of stores across Europe could lead to a loss of £190m in sales over the coming month.
As a result of the ongoing spread of coronavirus across mainland Europe, the value retailer has had to close stores in France, Spain and Austria, accounting for 20% of its selling space and 30% of its sales.
In a trading update, Primark said “we had expected sales of £190m from these stores over the next four weeks”.
These stores will remain closed until respective governments permit them to re-open. Affected store staff are currently being paid as normal.
John Bason, chief financial officer at the retailer’s owner, Associated British Foods, told Drapers: “We’re saying we can’t mitigate and we will have a profit shortfall. This is about continuing to carefully monitor the supply chain and make sure we look after our employees.”
The high-street retailer also said like-for-like sales across the rest of its store portfolio had been in decline over the last two weeks including the UK, which represents 41% of sales. This decline has accelerated over the past few days as a result of reduced footfall.
In a trading update, it stated: ”We are managing the business appropriately but do not expect to significantly mitigate the effect of the contribution lost from these sales.”
Bason added: “If anyone is worried about the liquidity of the business they should remember that ABF group has got £80m of cash.”
Supply shortages from China “are now expected to be minimal”, as most of the factories which supply Primark have reopened.
At this time, Associated British Foods (ABF), Primark’s owner, has not provided guidance for the remainder of the current financial year for the fashion retailer.
Bason called for an urgent review of business rates under the current circumstances.
“The time has come to look at business rates, and not just for small businesses,” he said.
First-half adjusted operating profit for the group is expected to be ahead of last year on both a lease-adjusted and a reported basis.