Primark, the Irish fashion retailer, is expected to take a huge financial hit due to COVID-19, the Financial Times reported.
The Dublin-based global discount chain, which has eight U.S. stores, was on track to earn one billion euros ($1.1 billion). But the coronavirus will take a two-thirds bite out of that, as its more than 370 stores across 12 countries were forced to close, the newspaper reported.
Associated British Foods (ABF), Primark’s parent company, which operates a portfolio of shops in 52 countries, said the shutdown would cost them more than 600 million euros ($674 million) in lost earnings.
Primark also experienced a cash outflow of 800 million euros ($899 million) as it kept paying suppliers while its U.K. stores were shuttered, the Times reported.
John Bason, ABF’s finance director, told the newspaper that the group’s original expectation had been that stores could remain closed into August.
“Spring and summer is now going to be half a season, rather than no season at all,” he said, adding that there had been “no fire sales” since reopening and that “hardly any” spring and summer product orders had been canceled.
Analysts at Citi said the retailer’s performance beat expectations, and that despite the COVID-19 disruption, Primark still plans to open 10 new stores this year.
Last week, PYMNTS reported that doing businesses safely amid the pandemic has added more than $7 billion in costs for everything from Plexiglass partitions and face masks to extra pay since the crisis struck last spring.
Amazon Founder and CEO Jeff Bezos told investors that he expects to spend $4 billion in added costs in the second quarter alone.
Bezos noted that the added costs for the eCommerce giant will likely equal the amount of money Amazon would have expected to have earned profits in typical times.
In the 2020 Remote Payments Study, PYMNTS’ survey of 3,477 consumers revealed that the number of shoppers who report using their mobile phones to find discounts increased to 54 percent in the last year, up from 47 percent. In addition, the portion who used them to gain loyalty credit has increased to 35 percent from 27 percent.
Selected by Fintech Tube