The owner of Primark today said it would restore its dividend and pay back furlough money as it issued an upbeat outlook following the reopening of retail stores.
Associated British Foods (ABF) halted its payout last year due to the outbreak of Covid-19, which sparked an almost £1.5bn hit to its first-half Primark sales.
The budget clothing chain’s adjusted operating profit also slumped 90 per cent to just £43m over the period.
However, London-listed ABF posted improved performance in its food business due to increased demand during the pandemic.
Its grocery, sugar, agriculture and ingredients divisions all boosted revenue and posted an aggregate 30 per cent increase in profit on the previous period.
Overall, the group’s revenue dropped 17 per cent to £6.3bn while operating profit was down eight per cent to £320m.
ABF’s net cash before lease liabilities was £705m, down from £801m at the same time last year, as the closure of Primark stores was offset by higher revenue in its food business and the decision to halt payouts.
The company today said the reopening of shops and vaccine rollout had made uncertainty “substantially lower” and proposed an interim dividend of 6.2p per share.
It also said it will pay back £121m in money it accessed through the furlough scheme.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said Primark was “back in the game after the shock of Covid”.
“Primark’s powerful social media presence has been key to its success in drawing shoppers back in, with 8.7m followers on Instagram alone,” she said.
“For now it seems, this leopard won’t be changing its spots when it comes to its online strategy, with no plans to open a digital store. Instead it sees international expansion as key to its growth prospects, with success in new markets like Florida and Poland.”
Despite the upbeat outlook, shares in ABF slipped just over two per cent as investors digested the lockdown sales hit.
ABF chief executive George Weston said: “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.”
“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.
“Looking ahead, with stores reopening and Primark once again becoming cash generative, our confidence is reflected in our decisions to repay the job retention scheme monies in respect of this financial year and to declare an interim dividend.”