Retail Giant Primark Fights Financial Losses with Rent Negotiations

  • Primark withholds £33m rent on closed stores
  • Revenue loss due to UK lockdown and store closures
  • ABF Foods shares dived after closure of European stores
  • Loss of £650m net sales per month from 376 closed stores in 12 countries
  • Work streams established to mitigate losses and reduce costs

Primark, the retail giant, has decided to withhold its quarterly rent on closed stores in an attempt to negotiate a deal with landlords to mitigate financial losses caused by the UK lockdown. The payment was meant to cover rent and service charges for most of its UK estate for the next three months. Primark’s inability to sell online has led to sales being wiped out due to store closures. This comes after Associated British Foods (ABF Foods), the owner, saw shares plummet in early trading on 16 March following the announcement of a potential £190m loss in sales from European stores’ closure. However, with UK stores accounting for 41% of sales and all 376 stores across 12 countries now closed ‘until further notice’, this equates to a monthly loss of £650m in net sales. ABF has established various work streams to mitigate the impact and is reviewing all expenditure. They have implemented significant reductions in discretionary spend and are making progress in reducing fixed costs through discussions with landlords. The company estimates it can recover around 50% of total operating costs due to government support in affected countries.

Factuality Level: 8
Factuality Justification: The article provides accurate information about Primark’s decision to withhold rent on closed stores and the financial impact of the closures due to the pandemic. It also mentions the company’s efforts to mitigate losses through cost reduction and discussions with landlords.
Noise Level: 3
Noise Justification: The article provides relevant information about Primark’s decision to withhold rent on closed stores and the financial impact of the closures due to the pandemic, but it lacks in-depth analysis or actionable insights.
Financial Relevance: Yes
Financial Markets Impacted: Primark’s decision to withhold rent payments may impact its landlords and the retail industry as a whole, as other businesses may follow suit in response to financial losses due to COVID-19 closures.
Financial Rating Justification: The article discusses Primark’s financial situation and its efforts to mitigate losses from store closures, which directly affects its rent payments and overall sales. This has an impact on the retail industry and potentially other businesses facing similar challenges.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no mention of an extreme event in the last 48 hours.

Reported publicly: www.retailsector.co.uk