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Primark 'well stocked' despite coronavirus disruption

Tom Belger
Finance and policy reporter
Primark released its latest results on Monday. (PA)

Primark’s owner has warned continued disruption to Chinese factories from the coronavirus could threaten future supplies of some of its product lines.

Associated British Foods (ABF.L) said in a trading update it was “well-stocked” with supplies for several months, as it typically orders ahead of Chinese New Year.

The company said it did not expect any short-term impact from the outbreak. But it said the “risk of supply shortages on some lines” later this year would increase if current disruption to manufacturing in China was “prolonged.”

It said it was considering asking suppliers in other regions to raise production, with many Chinese factories currently shut down to help contain the virus.

Read more: UK factories warn coronavirus hitting supplies of parts

Other brands owned by Associated British Foods have already faced a more direct impact from the outbreak in China, where it has now claimed more than 2,500 lives.

“Our AB Mauri, AB Agri and Ovaltine factories are operating, but at reduced capacity due to labour and logistics constraints,” the company said on Monday.

The clothing giant also announced it expects Primark sales to be 2.5% higher year-on-year in the first half of its financial year, which runs to 29 February. Its full results will be announced in April.

It said its trading had been “good” in November and December. Many other retailers had reported a tough period in the run-up to Christmas.

But it said sales weakened in January and February, partly as by comparison the start of the year had been particularly strong a year earlier.

Shares in Associated British Foods dropped 2.1% in early trading in London on Monday.

AB Foods Ltd five-day stock chart (Yahoo Finance)