Penneys owner: Full-year profit may exceed previous expectations

Discount clothing retailer says its overall profits for 2020 are likely to be better than expected following a strong post-Covid lockdown trading period

Primark/Penneys sees full-year profits exceeding initial expectations thanks to a strong post-lockdown trading performance

Discount clothing retailer Primark – which trades here as Penneys – has said its overall profits for 2020 are likely to be better than expected following a strong post-Covid lockdown trading period.

Earlier in the year it anticipated full-year adjusted operating profit of between £300m and £350m (€340m-€390m). 

It said it now expects profit to be “at least” at the top end of that range, implying the final surplus could exceed previous guidance.

The outlook covers the retailer’s operations across the UK, Ireland, mainland Europe and the US.

Primark is headquartered in Dublin, but is ultimately owned by UK agriculture-sugar-retail conglomerate Associated British Foods (ABF).

“Since reopening, we have seen increasing numbers of transactions driven by footfall. The average basket size was initially significantly higher than last year, reflecting some pent-up demand, and while this outperformance has reduced in recent weeks it remains higher than a year ago,” Primark said in its latest trading update.

It said compared to pre-Covid sales, performance since reopening has been “reassuring and encouraging”. ABF said Primark’s performance had exceeded expectations.

Primark said sales in mainland Europe since reopening are expected to be 17% lower, on a like-for-like basis, due to increased public health restrictions mainly in Spain and Portugal.

Sales in the US are likely to be down by 9%, but are 2% up when the company’s city centre store in Boston is excluded.

In the UK, like-for-like sales are expected to be 12% lower, but that decline shortens to 5% when its main city centre shop locations are excluded. ABF/Primark doesn’t break down figures for Penneys in the Republic, but includes its performance in Primark’s overall UK division.