Associated British Foods plc, the diversified international food, ingredients and retail group, is issuing the following statement which includes the likely timetable for the re-opening of Primark stores, early trading indicators from the recently re-opened stores which have been both reassuring and encouraging, and a group forecast with an improved cash flow.

The group trading update scheduled for 2 July will include Primark sales which will be informed by trading in stores soon to re-open and an additional four weeks of data.

Primark stores

As a result of the rapid spread of Covid-19 in our markets, all Primark stores were closed over a 12-day period from 11 March. As previously advised, this resulted in a loss of sales of approximately GBP650m for every month that all stores were closed.

We took a number of actions in Primark to substantially reduce the cash outflow resulting from this loss of sales. These mainly comprised cancellation of future orders for goods where the handover date from the supplier was after 17 April and a range of measures to reduce operating overhead while the stores are closed. The most significant contributor to the reduction in overheads has been access to government employment retention schemes across Europe, assisted by a temporary voluntary reduction in salaries for all Primark employees not covered by a government scheme. We continue to make progress in our discussions with landlords to renegotiate some of the terms in our lease arrangements. In April and May, we exceeded our previously advised estimate of a 50 percent reduction in Primark overheads.

As European governments have begun to ease restrictions on clothing retailing we have been able to re-open stores. Safety has been our highest priority in our detailed preparations to welcome our customers and employees back to stores. We are following government safety advice in all markets. Importantly, we will apply the valuable experience gained from more than 100 stores which are already open as we open the remainder of our estate, including stores across the UK. Social distancing protocols, hand sanitiser stations, perspex screens at tills and additional cleaning of high frequency touch points in the store are among the measures we are implementing. Personal protection, including masks and gloves, are being made available to all employees. These measures are designed to safeguard the health and wellbeing of everyone in store and to instil confidence in the store environment. Feedback from customers and employees in those markets where the stores are open has been positive.

As at today, Primark is trading in 112 stores which represent 34 percent of our total selling space. Primark is now working to re-open all its stores in England on 15 June, following the recent announcement by the UK Government. At that date we expect to be operating from 281 stores representing 79 percent of total selling space. We await further guidance for the stores in Northern Ireland, Wales and Scotland and anticipate openings in late June.

By 15 June, we will also have opened three new stores which were originally planned for opening in our financial third quarter: Mons in Belgium and Gropius in Berlin, Germany have already opened and a store in the Trafford Centre, Manchester in the UK will open on 15 June. When the remainder of our stores are re-opened, we will then be trading from 15.9m square feet of retail selling space across 378 stores.

Contact:

John Bason

Tel: +44 20 7399 6545

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