ABF will not pay a dividend, saving around £100 million, and the shares fell 4% or 83p to 1904p. The company has estimated the lockdown is costing around £650 million a month in lost sales.
Primark had faced supplier anger in Bangladesh over its decision to cancel orders for clothing from suppliers. Yesterday it agreed to pay £370 million for clothes already in production or completed.
Bason said: “We had to cancel orders. That was only ever the first step. Then there were intensive conversations with hundreds of suppliers on to one to find out what the problems were. That takes time.”
The retailer has around £2 billion worth of stock and hopes it can sell some of its spring/summer ranges next year, but some of the clothes will be “date coded” and of lower value or unsellable, Bason said. “We have taken a really sensible look. We have taken control of this. This is about selling the clothing but at a lower net realisable value.”
Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said: “The problems won’t all be solved when shops can reopen. The group outlined safety would continue to be a consideration, and is prepared to accept lower sales until the risk has been minimised. We may not see revenues go from zero to hero overnight.
“To the group’s credit, it’s much more than just retail. Its various food businesses mean ABF is an essential cog in the UK’s food machine, so a good proportion of revenue is still intact. Looking ahead the group’s priorities will be steadying the Primark ship, as well as protecting the supply chains and manufacturing capabilities of the food businesses during the disruption.”
