The boss of Primark’s parent company has described high streets as a “permanent part of being human” and defended its decision not to sell products online despite losing more than £3 billion of revenues during lockdown.
George Weston, chief executive of Associated British Foods (ABF), said yesterday that Primark had enjoyed record sales in England and Wales last week when shops reopened after lockdown and that the queues outside its shops showed that people did not want to buy clothes only online. “The footfall last week gives us every indication that millions of other people want to get back on the high street,” Weston said.
“It’s where we go for coffee, to meet friends, to see a movie, go shopping, touch and feel clothing. I personally don’t want to live my life behind a screen. I think all of that is just a normal part of life — a permanent part of being human really.”
Weston made the comments as ABF published its interim results yesterday. ABF owns Primark, which has 188 shops in the UK and employs 65,000 people worldwide, alongside grocery, sugar, agriculture and other businesses.
ABF’s half-year results showed a 17 per cent year-on-year fall in revenue to £6.3 billion for the 24 weeks to the end of February, pushing pre-tax profits down 8 per cent to £275 million. The closure of Primark shops has cost more than £3 billion in sales and £1 billion of profit over the past 12 months, ABF said, with cash outflows of £650 million in the past six months.
Despite the hit, Weston, 57, said that moving Primark online would prevent it from selling products at such low prices. “Our cost advantage comes from the fact that we are a bricks and mortar retailer which has neither the picking up costs, nor the distribution costs, of an online retailer,” he said.
The group expects to be trading from 68 per cent of its retail selling space at the end of April, rising to 79 per cent including stores with restricted trading.
Weston said that ABF had “weathered the worst of the pandemic” thanks to the stability of its other businesses while Primark shops were closed, as well as its conservative balance sheet.
It will pay an interim dividend of 6.2p a share after not paying a dividend in 2020. The payout is half the 12.05p it paid in 2019
ABF said that it would repay £121 million of government support received across its European business in this financial year, including money from the furlough scheme, of which £72 million will be repaid to the UK government.
Weston said: “Looking ahead, our confidence is reflected in our decisions to repay the job retention scheme monies in respect of this financial year and to declare an interim dividend.”
However, shares in ABF fell 146p, or 6 per cent, to £23.14 as the company said that profit for Primark was expected to be “somewhat lower than last year” for the full year and that its food businesses could face a softer second half.
Analysts at Shore Capital said: “Our confidence in the medium-term prospects for ABF remain undiminished, and the commentary around Primark’s reopening should give ABF shareholders a warm glow.”