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Primark warns coronavirus could cause supply shortages

Shoppers walk past a Primark store on Oxford Street in London: REUTERS
Shoppers walk past a Primark store on Oxford Street in London: REUTERS

Primark owner Associated British Foods today warned the coronavirus outbreak could mean “supply shortages” at the fashion retailer later this year.

John Bason, finance director at Primark owner ABF, told the Standard: “This is important, we are monitoring it daily and we are in close contact with all of our suppliers and consolidation centres in China.

“The return to work was slow but from a low level it is continuing to build. People think it’s getting worse but from a low level it’s actually building and Chinese authorities are working very very hard to get people back to work.”

Bason said clothes, homewares products and accessories like phone cases could be affected. ABF shares tumbled 2% to 2540p.

The retailer is prepared to switch its sourcing to elsewhere in Asia, eastern Europe or Turkey, he said.

Bason also ratcheted up the pressure on Chancellor Rishi Sunak to overhaul the business rates system in next month’s Budget.

Weekend reports claimed Sunak is considering scrapping business rates and replacing them with a land value tax in a bid to help the High Street.

Bason said its rates bill was around £50 million. National chains are angry that their online rivals are not burdened with the same bills.

Bason said: “There is no doubt that retail has changed enormously. What we are saying is that taxation on the High Street needs to be carefully looked at.

“For certain retailers to not have to pay anything and for us to pay that is a big deal.”

In a trading statement, ABF said it was on target to hit City profit forecasts this year after an improvement in sugar prices.

Sales at Primark are expected to be 4.2% ahead of last year, after opening new stores and an improvement in trading across Europe.