AB Foods Says Lost Sales at Primark Hurt 1st Half Results, Warns Over Further Hit in 2nd Half -- Update

By Matteo Castia

--AB Foods expects its sales, adjusted operating profit and adjusted earnings per share to fall in the first half of fiscal 2021

--The conglomerate's Primark clothing arm lost out on GBP1.1 billion of sales in the period

--Store closures should lead to a GBP480 million loss of sales in the second half for Primark

Associated British Foods PLC said Thursday that it expects lower group sales, lower adjusted operating profit and lower adjusted earnings per share for the first half of fiscal 2021, and warned Primark's sales will continue to suffer due to the coronavirus pandemic.

The U.K. conglomerate said the effect of the pandemic and the associated restrictions caused a loss of sales of 1.1 billion pounds ($1.56 billion) at its Primark clothing business during the 24 weeks ending Feb. 27. Store closures will cause a further loss of sales of GBP480 million in the second half, AB Foods warned.

Despite the lost sales, Primark remained profitable in the first half, the company said. "We expect the adjusted operating profit for Primark in the first half to be marginally above breakeven, but which would compare to an adjusted operating profit of GBP441 million for the same period in the last financial year," AB Foods said.

Primark's sales in the first half are estimated to fall to GBP2.2 billion from GBP3.7 billion a year earlier, the FTSE 100 company said.

It said the fall was largely caused by store closures. In the periods during which shops were open, business was strong, albeit still down 15% on the year on a like-for-like basis, due to the unfavorable context of the pandemic.

AB Foods said it expects 83% of its retail stores to reopen by April 26, and that the period following the reopening is likely to be highly cash-generative.

Meanwhile, first-half revenue and profits in the grocery, sugar, agriculture and ingredients businesses are expected to be ahead of both expectations and the year-earlier period, AB Foods said.

Write to Matteo Castia at [e-mail]

(END) Dow Jones Newswires

February 25, 2021 03:30 ET (08:30 GMT)

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