Business

Penneys owner AB Foods omits dividend to save cash in Covid-19 crisis

First-half operating profit rises 7% to £682m, while revenue increases 2% to £7.6bn

Penneys/Primark, which does not have an online business, generates about half of the group’s revenue and profit

Tue Apr 21 2020 - 08:43

Penneys/Primark owner Associated British Foods said it would not pay an interim dividend to save cash and could not provide full year 2019-20 earnings guidance for the fashion retailer because of uncertainty caused by the coronavirus crisis.

All of the Penneys/Primark’s 376 stores in 12 countries have been closed since March 22nd, representing a loss of £650 million (€736 million) of net sales per month. The group, whose shares have fallen 24 per cent so far this year, said on Tuesday it would be able to mitigate half of the operating costs of the Primark business while the stores remain closed.

However, it said the timing of the reopening of the stores remains uncertain, while the process of reopening, once it begins, was likely to be complex.

Primark, which does not have an online business, generates about half of the group’s revenue and profit.

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Unchanged

AB Foods said its second half expectations for its other businesses – sugar, grocery, ingredients and agriculture – were unchanged.

The group’s first half to February 29th adjusted operating profit rose 7 per cent to £682 million, on revenue up 2 per cent to £7.6 billion.

It said it would consider paying a dividend at the year end in the light of trading for the full financial year and the financial circumstances at that time.

"Although uncertainty remains, we have the people and the cash resources to meet the challenges ahead," said chief executive George Weston. – Reuters

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