ABF now sees bigger hit to sales from Covid-19 restrrictions

The tightening of lockdown restrictions to combat Covid-19 will take a higher-than -expected toll on Associated British Food's top line.

As of 1 January, 64% of the firm's total retail selling space, or 253 Primark stores, would be temporarily closed, resulting in a loss of sales for the announced periods of closure during the company's financial year of roughly £650m.

On 4 December, management had projected a smaller hit of £430m.

Just the day before, governments in the UK and the Republic of Ireland had announced further restrictions.

The company was scheduled to next issue a trading update for both its Primark fashion retail unit and the rest of its businesses on 14 January.

Commenting on the company's announcement, analysts at Shore Capital noted that while a second wave of Covid-19 infections had long been anticipated, the new coronavirus strain in the UK had not been, hence the tightening of restrictions.

"[...] for how long, well that is hard to call but we sense that six to eight weeks is a good cautious shout in this most unclear time even with the UK commencing a vaccination programme; we believe that the full impact of the inoculation activity is unlikely to fully emerge until towards the end of H1 of CY2021," they added.

"It should be stated in this respect that comparatives notably improve from Spring 2021 and if a vaccination infused UK and European population becomes more confident and mobile, it could be very positive for Primark, especially following the carnage of closures by much offline apparel space in the Britain in particular."