UK companies have warned of hundreds of millions of pounds in lost business over the coming weeks as they scramble to assess the cost of the new lockdown in England.
Associated British Foods said its Primark high-street fashion chain would lose £375m in sales after the government ordered all non-essential shops in England to close for at least four weeks from November 5, alongside similar measures elsewhere in Europe.
Retailers warned over the weekend that the forced closure would be a “nightmare before Christmas”. Helen Dickinson, chief executive of the British Retail Consortium, said the lockdown “will cause untold damage to the high street in the run-up to Christmas, cost countless jobs and permanently set back the recovery of the wider economy”.
Restaurants, cafés and pubs will also be required to close, except to serve takeaway food and drink, as will gyms and many other leisure facilities.
Shares in consumer-facing companies dropped sharply on Monday as analysts warned the next month would test many businesses.
Marston’s, the pub group, suffered a near-10 per cent fall, with shares in retailers Frasers Group down more than 10 per cent, JD Sports about 7 per cent and Card Factory almost 5 per cent.
GVC, the bookmaker, said earnings would be hit by between £37m and £43m depending on the length of the closure of its high-street stores. Shares in GVC — which said the impact would not be as severe as the last lockdown — were about 3 per cent lower on Monday afternoon.
Insurer Hiscox said it could face an extra $30m-$40m of claims for cancelled events if Covid-19 restrictions lasted into next year.
Primark, which does not sell clothes online, said its stores in Ireland, France, Belgium, Slovenia, Wales and Catalonia in Spain were closed as of Monday. Once the English lockdown comes in, 57 per cent of Primark’s 387 stores will be shut.
Other companies scrambled to put staff back on a furlough scheme that was due to close at the end of October. Park Plaza Hotels on Monday said it would use the scheme as needed. Hotels in the UK will also need to close again under the new measures.
Charlie Gilkes, who runs the Inception Group of bars and restaurants, said he was “formulating a plan” for his staff using the new furlough scheme. He added: “The timing couldn’t be worse — a large number of retailers and hospitality businesses do half their annual sales and profits in the coming eight weeks.”
But others warned it was already too late as staff had been made redundant ahead of the end of the closure of the original scheme. Restaurateur Jonathan Downey said it was “too late for the final 14 head-office people left employed but made redundant yesterday (including me). These final few were out of a total of 90 in the group employed in March”.
Smaller businesses are expected to be particularly hard-hit given that many lack the financial resources to survive another lockdown, with pubs and restaurants across England warning that this could push them to collapse having been hoping for a busy pre-Christmas period.
Humphrey Cobbold, chief executive of PureGym, called the decision to close fitness facilities “regressive” and “unsupported by the data and evidence that we have presented to government repeatedly over the past few weeks”.
Lockdown will cost PureGym about £3.5m a week, he added.
Adam Marshall, director-general of the British Chambers of Commerce, said the curbs would be a “devastating blow to business communities who have done everything in their power to adapt and operate safely”.
He added: “Many firms are in a much weaker position now than at the start of the pandemic, making it far more challenging to survive extended closures or demand restrictions.”