Covid-19: Primark lays bare the costs of coronavirus

Primark has outlined the devastating impact the Covid-19 lockdown is having on its business in the release of interim half-year financial results up until 29 February 2020. The high-street retailer stated it has gone from making sales of around £650 million per month to zero following the closure of its stores on 22 March as the Covid-19 crisis developed. The store has no online business to fall back on during this time.

Pre-tax profits are also being severely damaged due to having paid for, and taken delivery of very large amounts of completed stock which cannot now be sold, worth a total of £248 million. This has contributed to total charges increasing to £309 million compared with just £79 million in the same period last year. As result, statutory operating profit for the period slumped by 35% to £349 million.

This is despite the group’s revenue growing by 2% to £7.6 billion in the six months up to 29 February 2020 compared with the same period last year.

In an accompanying letter, the chief executive of Associated British Foods, George Weston confirmed that 68,000 retail staff had been furloughed across Europe to avoid redundancies being made.

“The group delivered an encouraging trading performance in the first half. The rapid spread of Covid-19 has impacted all of our lives and the human tragedy that continues to unfold has shocked and saddened us all,” said Weston. “We are a strong, diversified and resilient group. Our people are working hard to maintain supply from our food businesses. Primark is managing through an extraordinarily challenging period after all of its stores closed in March and our management response to mitigate the cash outflows was swift and proportionate. Although uncertainty remains, we have the people and the cash resources to meet the challenges ahead.”

Yesterday, the clothing retailer committed to paying £370 million to suppliers for stock in stores, depots and in transit.