Primark bosses warn of long-term stock shortages due to coronavirus

Primark owner Associated British Foods has warned that there could be a shortage of stock later this year, if delays in its Chinese factories are prolonged due to coronavirus.

AB Foods, which sources several of its key lines from China, said it typically builds inventories in advance of Chinese New Year and, as a consequence, is well stocked with cover for several months and does not expect any short term impact.

However it warned that long-term manufacturing delays due to the virus could hit sales in stores across the UK and Europe.

The fashion chain's owner Associated British Foods (ABS) said overall, half-year sales and operating profit growth are both expected to surpass expectations following strong sales at the high street retailer.

The group said Primark sales in the first half of the financial year were 4.2% higher than the same period last year, as it was boosted by recent site expansions.

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In January, Primark announced plans to open another 18 stores this year.

The fast-fashion chain said it had a "particularly good" November and December, seeing sales rise 4% on last year driven by a "strong contribution" from it's new shops.

"This sales growth was due almost entirely to the increase in selling space," the chain's owner, Associated British Foods, said in a statement.

"We now expect to add a net 0.9 million square feet of additional selling space in this financial year," it added.

"We expect to open 18 new stores together with a number of relocations."

And the expansion isn't limited to the UK.

"As previously announced, we will enter the Polish market with a new store in Warsaw in spring 2020, followed by a store in Prague, Czech Republic," Associated said.

"We have now also signed leases for a further store in Poland, in Poznan, and for our first store in Slovakia, in Bratislava which will take Primark to its fifteenth country."

Sophie Lund-Yates, market analyst at Hargreaves Lansdown, said: “Primark is proof not every retailer struggled this Christmas."

She added: "What’s most striking about Primark is it’s essentially an old school retailer. Lack of a meaningful online business makes the chain a high-street play, so the improvement to sales performance is even more impressive."

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