Primark sales have been “lower than expected” in the past few months after customer footfall was impacted by “pingdemic” contact tracing, according to the owner of the discount fashion chain.
But Associated British Foods (ABF) has raised its profit forecast for the past year nonetheless, as Primark benefited from lower wage and operating costs in its stores in the last quarter.
The consumer giant told investors on Monday that its earnings for the past fiscal year will outperform the previous one after strong earnings developments from Primark and its grocery store.
ABF also benefited from “very much improved” profits in the sugar business.
Primark is expected to generate revenue of around £ 3.4 billion for the first half of September after the momentum had eased slightly in the summer, the company said.
The retail chain saw “very strong trading” in the third quarter after stores reopened, but was hit by a shift in consumer sentiment as more people were “pinged” about potential Covid cases.
In a statement, ABF said: “In the UK, our sales have been impacted by the rapid and significant increase in the number of people self-isolating after contact tracing warnings – the ‘Pingdemic’ – in late June and early July.
“The data shows that the number of visitors on the main streets was influenced by the caution of many consumers at the time.
“At the beginning of August, the rules on self-isolation were relaxed.
“Correspondingly, like-for-like sales improved over the entire period from a decrease of 24% in the first four weeks of the quarter to a decrease of 8% in the last four weeks.”
For the fourth quarter as a whole, the company expects sales to decline 17% from 2019 onwards compared to the same period.
It added that there are currently “some delays” in inventory levels for the fall / winter season due to “disruptions in port and container freight traffic”.
Covid-19 restrictions have also “slowed” the company’s progress in developing its pipeline of new business, with difficulties assessing and evaluating new locations and negotiating with potential landlords, it said.
Meanwhile, ABF’s grocery sales are expected to be higher than last year as they receive a boost from growth in the Twinings and Ovaltine beverage businesses.
It added that its AB World Foods, Silver Spoon and Westmill businesses were seeing sales well above pre-pandemic levels and continuing their sales successes from last year.
However, sales of the Allied Bakeries branch, which produces Kingsmill bread, fell after the end of a supply contract for the supermarket chain Co-op.
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