Primark has been forced to close 20% of its stores after European governments shut down high streets to prevent the spread of coronavirus.
Lockdowns in Italy, France and Austria are expected to cost the budget retailer about £190 million over the next four weeks. Primark owner Associated British Food has said it has closed one store in five as the disease outbreak hits operations across Europe. ‘With developments over the last week in Italy and, more materially, over the weekend in France, Spain and Austria, stores accounting for 20% of Primark’s selling space are now closed until the respective governments permit them to re-open’ the firm said on Monday morning.
UK stores are still open, but footfall has reduced dramatically as people take measures to protect themselves from the deadly virus. Primark didn’t rule out closing stores in the UK if things became worse.
‘The remainder of the estate, including the UK which represents 41% of sales, has seen like-for-like sales declines over the last two weeks and these have accelerated over the past few days as a result of reduced footfall’ the statement read.
‘Our priority continues to be the health and safety of our colleagues, customers and partners. Each of our businesses are closely monitoring the current and potential effects of the outbreak on their operations’ it added.
Shares in Primark were suspended at 9am on Monday, on another bruising day for the stockmarket when the FTSE 100 fell as much as 8.7%. However, unlike many others, the company stressed they are in a strong position to survive the coronavirus crisis, with production finally picking up in China as the country slowly begins to recover from the disease outbreak.
The statement said: ‘In our February trading statement we described the risk to supply of goods from our suppliers in China. Since then, the situation in China has improved, with most factories supplying Primark having re-opened. As a result, supply shortages from that country are now expected to be minimal.
The firm’s owner added: ‘The group has a strong balance sheet, substantial cash liquidity with some £800million of net cash at the half-year and significant undrawn bank facilities.’
*Life in China is beginning to return to normal after a month of lockdown due to coronavirus. The disease first emerged in the city of Wuhan in December before rapidly spreading to over 100 countries across the globe. Last week the World Health Organisation officially declared covid-19 as a pandemic and said Europe was officially the new epicentre of the infection, with the number of daily deaths and cases on the continent surpassing those in China.
Coronavirus is wreaking havoc on the global economy, with airlines, food and drink companies, and small businesses struggling to stay afloat as more people self-isolate or are ordered to stay indoors.
The outbreak has all but decimated the travel industry, with regional airline Flybe collapsing, holiday firm TUI suspending all package holidays and cruises, British Airways fighting for survival and Virgin Atlantic demanding a £7.5bn bailout for the aviation industry from the UK government. Global stock markets have suffered their biggest losses since the 2008 financial crash. Meanwhile, trade union UK Hospitality said the sector is facing an ‘existential threat’ unless laws are changed to allow temporary staff redundancies.
More businesses are expected to close or cut jobs as countries dial up efforts to stop the spread of coronavirus. The Irish government, which has already closed schools for two weeks, has called on all bars and pubs in the country to close to help curb the spread of coronavirus. On Saturday, Spain was the latest country to go into lockdown, following the likes of Italy, France, Denmark and Austria.