UK-based Associated British Foods expects to incur a sales loss during retail store closures in the first half of 2021 at £1.1 billion, it recently announced. It expects Primark sales in the first half to be around £2.2 billion and the adjusted operating profit to be marginally above break-even. Primark’s lower profitability will result in a rise in the group’s effective tax rate this year to some 30 per cent.

“For the first half of 2021, we expect revenue and profit in each of our grocery, sugar, agriculture and ingredients businesses to be ahead of both expectation and the first half of last year,” the company said in a statement.

“We are looking forward to the reopening of the Primark estate. As of today, we have likely reopening dates for 233 stores in addition to the 77 stores already open, so that 83 per cent of our retail selling space should be trading by 26 April. Our stores will be offering exciting seasonal ranges for spring/summer and we have been placing orders for merchandise with a long lead time for the autumn/winter season. We expect the period after reopening to be highly cash generative,” it said.

The group’s net cash before lease liabilities is now expected to be some £650 million at the half year. The improvement since its last trading update is primarily driven by lower working capital requirements in all its businesses, it said.

The cash outflow for the group in the first half of this year is expected to be some £900 million.

Fibre2Fashion News Desk (DS)

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