A DEFIANT Primark today revealed that a lockdown until March will cost it £1 billion in lost sales but insisted it will bounce back strongly once shops re-open and dismissed analysts who say it needs to go online.
Parent group ABF – Associated British Foods – had previously said sales would be down by £650 million due to temporary store closures since Covid began.
Primark famously does not do internet sales, arguing the cost of delivery would only increase the price of the clothes, undermining its main advantage over rivals.
Richard Lim of Retail Economics, said: "The inability to switch to online during periods of lockdown is laid bare by these figures. Whether the retailer will find a way to make the economics of online retailing work remains to be seen... But currently, Primark is not taking part in that battle and the longer these disruptions continue, the larger the price they will have to pay."
ABF finance director John Bason told the Standard: “I hate the fact that we have lost £1 billion of sales. But at our price point online deliveries don’t make sense. Primark is different. People wait for us. We will get through it and are looking to the other side.”
He notes that Primark sales soared after the first two lockdowns. “When we re-open, we know how well we trade,” he said. “Our total market share has remained rock solid. We have something special.”
The downbeat statement today was just to “give investors transparency”. He added: “Our view is that people are looking forward to going on holiday, having a party and shopping at Primark.”
Overall group sales are up down 13% to £4.8 billion in the year to date. Sales of food – it owns Twinings and Silver Spoon – are up 7%.
ABF says it is “well prepared” for the end of the Brexit transition period. It said: “At this early stage, we have seen no material disruption to our supply chains.”
ABF shares slipped 18p to 2203p, but are up sharply since a November low of 1669p.
Three quarters of Primark’s retail space is closed, including all 190 UK shops.
Primark has moved into the US, historically a place where UK retailers have failed.
ABF said Brexit had not so far led to any “material disruption to our supply chains” and it expects to see “little impact from changes in tariffs”.