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Primark encouraged by post-lockdown sales but profit to slump

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By James Davey

LONDON (Reuters) - Trading in British fashion chain Primark's reopened stores has been encouraging but the prolonged coronavirus lockdown means the retailer's full-year profit is likely to slump by about two thirds, owner Associated British Foods <ABF.L> said.

All 375 Primark stores were shuttered in March as the pandemic spread. As governments eased lockdown restrictions the stores reopened, including all 153 stores in England on June 15.

AB Foods said on Thursday that since the reopening of the first Primark stores on May 4, cumulative sales for the seven weeks to June 20 were 322 million pounds ($403 million) and were 12% lower than last year on a like-for-like basis.

It said sales in the week ended June 20, with more than 90% of selling space reopened, were 133 million pounds and trading in England and Ireland was ahead of the same week last year.

"We're really getting back to business here. That number (down 12%) is much better than people were expecting," AB Foods finance chief John Bason told Reuters.

Shares in AB Foods were up 5.6% at 0835 GMT, paring 2020 losses to 20%.

However, the lockdown means Primark's profit will be substantially down. The retailer has no online offer.

For the full 2019-20 year, Primark forecast adjusted operating profit in a range of 300-350 million pounds, down from the 913 million pounds made in 2018-19.

Bason said Primark has also placed more than 800 million pounds of orders for the autumn/winter season and expects the total to exceed 1 billion pounds.

AB Foods said overall group revenue from continuing businesses for the 40 weeks to June 20 was 13% lower than the same period last year at constant currency.

For 2019-20 it expects "strong progress" in adjusted operating profit at its sugar, grocery, agriculture and ingredients businesses.

The grocery division, whose brands include Kingsmill bread, Twinings tea, Ovaltine and Jordans cereal, had a 9% increase in third-quarter revenue, with higher sales through retail channels more than offsetting weaker demand from foodservice businesses, such as restaurants and bars, shut in the lockdown.

The group expects to end the year with net cash of more than 750 million pounds.

($1 = 0.8002 pounds)

(Reporting by James Davey; editing by Kate Holton and Jane Merriman)

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