Primark warns of £220 million loss due to Tier 4 restrictions

Source:  04-01-2021

Primark has warned of an additional loss of £220 million due to Tier 4 restrictions in England. Primark’s owner AB Foods has said it expects to lose £650 million in sales for the year ending September 2021, this is an increase of £430 million it had announced on December 4.

Primark said all of its 253 stores would be closed from January 1.

“With 75% of England’s population and the entirety of Wales in tier 4, where non-essential stores are closed, this is naturally hitting businesses like Primark harder than most. In the year to September 2020 Primark estimates it lost around £2bn in global sales, and the business estimates the move to tier 4 will cost it up to £430m in sales in the coming financial year.
Such numbers are stark and show the extreme impact store closures can have. Unlike many others Primark has resisted, to-date, the urge to either launch fully online or offer click-and-collect/curbside collection. There is logic here; we have seen when stores are able to reopen swathes of shoppers are ready to come back to store – and with the store footprint Primark has, it needs shoppers to be in-store.
However, the reality is in these interim periods Primark is losing significant levels of replacement and urgency based demand – something that is core to its offer. In the past we have written that only a business of Primark’s size could afford not to have some online presence, 2020 shook even this position.
There is significant hope that even if the first few months of 2021 are tough for retailers and consumers, and that better and ‘more-normal’ times lay ahead. However, 2021 will also be a period where the retail sector will need to reflect on the measures it has taken to simply meet demand in 2020 against extraordinary factors. What stays, what is scaled up and scaled back, and what is shut down will mark the foundations for the retail landscape moving forward. Online will be a crucial component of this, and whether Primark remains the outlier or enters the market – the group of businesses without an online presence will only further diminish moving forward.
To all the readers of Today in Retail we hope that you had a good, in the circumstances, festive period and New Year.”