AB Foods European sales slump on Covid-19 closures, declining footfall
Primark owner Associated British Foods said it had seen an accelerated decline in sales in its European stores as they were either closed or customers stayed away due to the coronavirus despite an improvement in supplies from China.
The company on Monday said it had expected to generate £190m in sales from these shops in the next four weeks, but this target had been hit by enforced store closures in Italy, Spain and Austria, and reduced footfall in the rest of its estate, including the UK, which represents 41% of sales.
“We are managing the business appropriately but do not expect to significantly mitigate the effect of the contribution lost from these sales,” the company said in a statement.
AB Foods said most of its supplier factories in China had reopened and shortages from that country were now expected to be minimal.
“For the first half, adjusted operating profit will be ahead of our previous expectations, mainly due to higher margins for Primark and grocery. As a result, adjusted earnings per share for the first half will now be ahead of last year on both a lease-adjusted and a reported basis,” AB Foods said.
“The group has a strong balance sheet, substantial cash liquidity with some £800m of net cash at the half year and significant undrawn bank facilities.”