Primark’s sales fall short as COVID continues to take toll

Signage is displayed outside a Primark store at the Oxford Street, in London, Britain July 2, 2020. REUTERS/Hannah McKayPrimark Q4 underlying sales seen down 17% on two-year basisUK sales hurt by ‘pingdemic’Group still raises full year profit forecastShares down 3.4%LONDON, Sept 13 (Reuters) – Sales at fashion retailer Primark fell short of management expectations in its latest quarter, hit by public health restrictions in major markets to control the fast-spreading Delta coronavirus variant.Shares in owner Associated British Foods (ABF.L) were down 3.4% at 0859 GMT after it forecast Primark’s like-for-like sales in its fourth quarter to Sept. 18 were down 17% on the same period two years ago. That was after a 3% increase in the third quarter when stores reopened from pandemic lockdowns.Primark’s two biggest markets, Britain and Spain, were particularly badly hit.Britain suffered in late June and early July from a surge in the number of people self-isolating following contact tracing alerts – the so-called “pingdemic”. Spain was hurt by the decline of foreign tourism.The group said Primark, which does not trade online, did see an improvement from a weekly decline in like-for-like sales of 24% early in the quarter to a drop of 10% in recent weeks.Finance chief John Bason said Primark maintained its market share and was optimistic about key Christmas trading.He noted delays with some autumn/winter inventory caused by port and container freight disruptions – part of supply chain problems across Britain due to a shortage of lorry drivers.But he said stores were not short of product.”Is it easy in the supply chain? No … but it’s about delays rather than cancellations,” he told Reuters. read more And despite the shortfall in Primark’s sales, the group raised its profit outlook for the 2020-21 financial year, reflecting strong profit margins at the fashion business – due to a significant reduction in labour and store operating costs – and a robust performance from its food and sugar operations.It forecast full-year adjusted operating profit before the repayment of government job retention money, above last year’s 1 billion pounds ($1.4 billion), excluding the benefit of a 53rd week this year. It had previously forecast an outcome in line with the previous year.($1 = 0.7233 pounds)Reporting by James Davey Editing by Michael Holden and Mark PotterOur Standards: The Thomson Reuters Trust Principles.

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