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Penneys Owner Issues Trading Update Due To Covid-19 Closures

Published on Mar 23 2020 11:40 AM

Penneys Owner Issues Trading Update Due To Covid-19 Closures

Associated British Foods plc has issued an update on trading in its Primark & Penneys stores, further to the update issued on 16 March 2020, as a 'result of the rapidly changing situation regarding Covid-19.'

"As at 16 March 2020, Primark stores representing 20% of selling space and 30% of sales were closed. Since then, and following the closure on Sunday of all stores in the UK which represented 41% of sales, all 376 stores in 12 countries are now closed until further notice," the company said.

This represents a loss of some £650 million of net sales per month for the group, it outlined it a statement.

'Work Streams'

The diversified international food, ingredients and retail group said that a variety of work streams have been established to mitigate the effect of the contribution lost from these sales and all expenditure is being reviewed.

"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," it said.

As a result, the company highlighted, it currently estimates being able to recover some 50% of total operating costs.

To manage Primark stock the company said that it has also 'regrettably' informed suppliers that it will stop placing new orders.

The group noted that it has a strong balance sheet, substantial cash liquidity with some £800 million of net cash at the half year, together with a revolving credit facility of some £1.1 billion. Therefore, total available liquidity is £1.9 billion.

"Importantly, we reiterate that in aggregate, we have not seen a material impact in our sugar, grocery, ingredients and agriculture businesses," it concluded.

© 2020 Checkout – your source for the latest Irish retail news. Article by Donna Ahern. Click sign-up to subscribe to Checkout.

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