Primark-owner Associated British Foods (AB Foods) has reported a 90 per cent drop in adjusted operating profit for the budget retailer.

In the six months to 27 February, profits slumped to £43 million, compared to £441 million in the previous year.

The company, which did not have an online store to bolster sales, saw revenue drop by 41 per cent to £2.23 billion across the same period, down from £3.7 billion last year.

Primark estimates that the loss of sales whilst stores were shut reached around £1.1 billion.

During periods where stores were open, restrictions resulted in a like-for-like sales decline of 15 per cent.

In the previous financial year AB foods received £98 million from job retention schemes. AB Foods said that it had been eligible for a further £79 million from job retention schemes, bringing the total furlough money to £121 million.

Despite the retailer’s decline in profits and sales, chief executive of the group George Weston said that with stores opening up and Primark becoming cash generative again, the company has decided to repay the furlough money for this financial year and will also declare an interim dividend.

Primark stores in England and Wales delivered record sales in the first week after reopening on 12 April.

Overall revenue for the group was £6.3 billion, 17 per cent behind the previous year, largely driven by the loss of retail sales.

“Adjusted operating profit of £369 million was 46 per cent lower than last year at actual exchange rates as a result of the contribution lost at Primark,” said Michael McLintock, chairman of AB Foods. “Net finance expense was in line with last year, but the adjusted effective tax rate increased substantially to 35 per cent as a result of lower profitability for Primark expected for the full year which will now include the repayment of job retention scheme monies relating to the current financial year.”

But chief exec George Weston said that Primark sales after store reopenings had demonstrated the relevance and appeal of its low-cost offering.

“We are excited about welcoming customers back into our stores as the lockdowns ease and are delighted with record sales in England and Wales in the week after reopening on 12 April,” said Weston. “With our success in a number of new markets, as wide-ranging as Poland and Florida, we are as convinced as we have ever been in the long-term growth prospects for Primark.”

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