Associated British Foods Primark sales down 30% on last year

Associated British Foods Plc

Associated British Foods plc (LON:ABF) has announced a trading update for the 16 weeks to 2 January 2021 covering the group businesses and the significant trading developments in Primark since the AGM trading update on 4 December and the update of temporary Primark store closures on 31 December.

Group revenue 

Group revenue from continuing operations for the 16 weeks ended 2 January 2021 was 13% lower than the same period last year, at constant currency.  At actual exchange rates, revenue from continuing operations was 12% lower than the comparable period in the last financial year. The following table sets out revenue on a segmental basis for the period with changes at constant currency to the prior year. 

Year to dateLast Year
Total Food2,7712,601+7%

Following a strong performance in our last financial year, trading across Grocery, Sugar, Agriculture and Ingredients has been ahead of both expectation and last year in this period. 

The Retail performance was materially impacted by the increased restrictions on the movement of people and trading activity announced and put in place again by UK and European governments, principally during November and late December, to limit the spread of COVID-19. Our estimate for the loss of sales in the periods of closure during these 16 weeks is £540m. While stores were open, trading was strong given the circumstances, with sales at -14% on a like-for-like basis compared to last year. We opened five new stores in this period with a very positive customer reaction.


Primark sales were 30% lower than last year at constant currency and 28% lower at actual exchange rates. This period has been characterised by the impact on our trading activities of the varying restrictions on the movement of people put in place by UK and European governments to limit the spread of COVID-19. These measures have ranged from restricted trading hours to complete closure of stores. Our estimate for the loss of sales in the periods of closure during these 16 weeks is £540m.

While stores were open, trading was strong with sales at -14% on a like-for-like basis compared to last year. Performance has varied by store, reflecting the prevailing circumstances of our customers at the time including home working, less commuting and much less tourism.  Sales at our stores in retail parks were higher than a year ago, shopping centre and regional high street stores were lower than last year and large destination city centre stores, which are heavily reliant on tourism and commuters, continued to see a significant decline in footfall.  While stores were open, and excluding our 16 major city destination stores, trading was stronger at -10% on a like-for-like basis for the whole estate and, excluding Boston, the trading performance of our US stores continued to be strong and delivered sales in line with last year on a like-for-like basis.

Sales were strong in those stores open during the festive season, reflecting the excitement and broad appeal of the Primark offering.  In a number of stores we operated extended opening hours in the lead up to Christmas to manage high customer demand and spread shopping hours over a longer period of time. All Christmas and gifting lines were sold out and the performance for “stay at home” product categories was strong, especially in nightwear and loungewear. The level of markdown was substantially lower than the same period last year. We will warehouse some £200m of autumn/winter stock for later this year. All orders placed with our suppliers will be honoured.

We are implementing operational plans developed to manage the consequences of the closures. As a result overhead costs have been partially mitigated with some 25% of operating costs of the closed stores being saved during the period.

As of today, 305 stores are closed which represent 76% of our retail selling space.

The uncertainty about store closure periods in the short term has increased. Making the assumption that all of the stores currently closed remain closed until the financial half year, at 27 February 2021, the loss of sales caused by temporary store closures would reach some £1.05bn. This is up from our previous estimate, based on announced closure dates, of £650m communicated on 31 December. We expect to partially mitigate the loss of contribution by ensuring the continuation of the measures in place to deliver savings of some 25% of the operating costs of those stores that are closed.

On this basis, we expect the adjusted operating profit for Primark in the first half to be broadly break-even, which would compare to an adjusted operating profit of £441m for the same period in the last financial year. We expect the group’s net cash before lease liabilities to be some £500m at the half year.

Under the scenario that the entire estate is closed imminently, and remains closed until the end of March, we would expect to see over the three month period a further loss of Primark sales of some £0.8bn, and a consequent reduction in profit contribution of some £0.3bn.

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Retail selling space increased by 0.2m sq ft since the financial year end and, at 2 January 2021, 389 stores were trading from 16.5m sq ft which compared to 15.8m sq ft a year ago. Five new stores were opened in the period: Barcelona Sant Cugat and Espacio Leon in Spain, Sawgrass Mills Florida and American Dream New Jersey in the US and Roma Maximo in Italy. In addition, we relocated to larger premises in Southend UK. The very positive customer reaction to these store openings, both in the US and in Europe, was striking given the circumstances.

Although COVID-19 has delayed some store openings, we still expect to add a net 0.7m sq ft of additional selling space in this financial year. We expect to open 15 new stores: five in Spain, three in the US, two in Italy, one in each of the UK, France and the Netherlands, a further store in Poland, and our first store in Czechia, Prague. Based on our successful resizing of several US stores, we will downsize our Boston Downtown Crossing store to 38,000 sq ft. This will improve both store profitability and customer experience.

Looking ahead, we continue to build the pipeline of new stores with recently signed leases. New stores include Jamaica Avenue in Queens New York, six in Italy, three in France, Katowice in Poland and Brno in Czechia.


AB Sugar revenue was 6% ahead of last year at constant currency and in line at actual exchange rates. This was driven primarily by higher average sugar prices for British Sugar, combined with record bioethanol prices in recent months, and higher sugar prices in Illovo. Operating profits are significantly ahead year-to-date.  Our expectation for the full year is unchanged, with operating profits well ahead.

We expect that UK sugar production for the 2020/21 campaign will be some 0.9m tonnes, well down on last year’s 1.19m tonnes, due to the severe impact of virus yellows disease on sugar beet. On 8 January the UK Government made the decision to permit the emergency use of neonicotinoids as a seed treatment for sugar beet for next year’s UK crop.


Grocery sales were higher than last year. Revenue increased 7% at constant currency and 8% at actual exchange rates. Growth was particularly strong in Twinings Ovaltine and our UK Grocery businesses, which had the benefit of higher sales to international customers ahead of the deadline for the end of the Brexit transition period and continued higher volumes in retail grocery as people spent more time at home during lockdown.

Ovaltine delivered a strong performance in this period in developing markets and ACH experienced growth driven by higher domestic consumption.


AB Agri revenue was 10% ahead of last year at both constant currency and actual exchange rates.


Sales in Ingredients were 3% ahead of last year at constant currency and 1% ahead at actual exchange rates. We have continued to experience strong demand for retail yeast and retail bakery ingredient products in AB Mauri. 


We suspended earnings guidance for the group on 16 March 2020 due to significantly increased uncertainty concerning the impact of COVID-19 on business performance.

The impact of store closures on Primark’s performance is significant. We now expect full year sales and adjusted operating profit for Primark to be somewhat lower than last year. We will continue to expand retail selling space. The lower profitability of Primark, and the consequent change in the weight of profit by tax jurisdiction for the group will result in an increase in the group’s effective tax rate for the year from the 25% previously advised.

The performance of Sugar, Grocery, Ingredients and Agriculture has been very strong to date and for the full year our expectation remains for adjusted operating profit in aggregate from these businesses to be well ahead of last year.

Assuming that all the Primark stores that are currently closed remain closed until the half year, we expect the group’s net cash before lease liabilities to be some £500m at the half year.


Our businesses were well prepared for the end of the Brexit transition period. As a result of the free trade agreement with the EU, together with the UK’s negotiation of trade continuity agreements with other countries, we expect to see little impact from changes in tariffs. At this early stage, we have seen no material disruption to our supply chains.


The group intends to hold the first of a series of investor events setting out its approach to Environmental, Social and Governance (ESG) factors. The first of these events will be held on Monday 1 March. Further details will follow in due course.


Definitions of the alternative performance measures referred to in this announcement can be found in note 30 of Associated British Foods’ Annual Report and Accounts 2020.

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