Via Yahoo Finance

Primark owner Associated British Foods today called for advance notice from Government on when stores can reopen to make them safe.

The fashion chain shut all of its shops in March when the Government ordered all non-essential stores to open and it does not have a website, making the coronavirus shutdown even tougher than for rivals.

Finance chief John Bason told the Standard that the company would like “three to four weeks” notice. “It would be great to know when we may reopen,” he said.

The chain, which has 370 stores, will reopen five shops in Austria – where the government allowed some stores to begin trading again last week – in the first week or May and has begun studying how to ensure social distancing and hygiene measures, including in its fitting rooms.

Some governments have limited the number of customers per square feet allowed in stores, while retailers are rushing to get screens to protect staff.

“We’re learning a lot from how the food retailers are keeping people safe in their stores,” Bason added.

ABF chief executive George Weston paid tribute to two employees who had died from Covid-19, and added: “Much as I would love to be allowed to reopen Primark stores across the UK, Continental Europe and the USA soon, because lockdown has so harmed our business and our supply chains, I know that we must not do so until we have suppressed this disease.

“And when we are allowed to reopen we must make our Primark stores safe for our staff and our customers, even if that means ensuring there are fewer people shopping at any one time and so accepting lower sales at least until the remaining risk is minimal. In time we can rebuild the profits. We can’t replace the people we lose.

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ABF today reported a 35% drop in first-half profits to £349 million, with revenues up 2% to £7.6 billion.

Profits were hit by a £309 million charge – including £25 million from a bakery warehouse fire in Bradford last month and £284 million lost on the devaluing of stock sitting unsold in its stores and depots.

ABF will not pay a dividend, saving around £100 million, and the shares fell 4% or 83p to 1904p. The company has estimated the lockdown is costing around £650 million a month in lost sales.

Primark had faced supplier anger in Bangladesh over its decision to cancel orders for clothing from suppliers. Yesterday it agreed to pay £370 million for clothes already in production or completed.

Bason said: “We had to cancel orders. That was only ever the first step. Then there were intensive conversations with hundreds of suppliers on to one to find out what the problems were. That takes time.”

The retailer has around £2 billion worth of stock and hopes it can sell some of its spring/summer ranges next year, but some of the clothes will be “date coded” and of lower value or unsellable, Bason said. “We have taken a really sensible look. We have taken control of this. This is about selling the clothing but at a lower net realisable value.”

Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said: “The problems won’t all be solved when shops can reopen. The group outlined safety would continue to be a consideration, and is prepared to accept lower sales until the risk has been minimised. We may not see revenues go from zero to hero overnight.

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“To the group’s credit, it’s much more than just retail. Its various food businesses mean ABF is an essential cog in the UK’s food machine, so a good proportion of revenue is still intact. Looking ahead the group’s priorities will be steadying the Primark ship, as well as protecting the supply chains and manufacturing capabilities of the food businesses during the disruption.”