23rd Mar 2020 09:18
(Alliance News) - Associated British Foods PLC on Monday warned that it stands to lose around GBP650 million per month in net sales from the closure of all 376 Primark stores in 12 countries until further notice due to the Covid-19 pandemic.
In the year to September 14, 2019, fast-fashion retailer Primark recorded GBP7.79 billion in sales and adjusted operating profit of GBP913 million.
The FTSE 100-listed company, however, said it has not seen a material impact from the virus on its other divisions - sugar, grocery, ingredients and agriculture businesses.
Shares in the company were trading 6.0% lower at 1,652.50 pence each in London on Monday morning.
London-based AB Foods said it has established a variety of work streams to mitigate the effect from the loss of sales and is reviewing all expenditure.
"In the first instance we have implemented a significant reduction in discretionary spend. We are making good progress in also reducing fixed costs following discussions with counterparties, in particular landlords, and welcome the recently announced government support in the countries in which our stores operate. As a result, we currently estimate being able to recover some 50% of total operating costs," the company added.
It has decided against placing any new orders to its suppliers to manage Primark stock.
AB Foods continues to have a strong balance sheet with around GBP800 million net cash and a GBP1.1 billion loan facility, it said. In total, it has GBP1.9 billion in cash and equivalents.
By Tapan Panchal; [email protected]
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