MARKET REPORT: Primark owner Associated British Foods soars as restrictions are lifted on ‘non-essential’ stores
Primark’s owner was cheered by investors yesterday as it became the latest major chain to announce reopening plans.
In line with a lifting of restrictions on ‘non-essential’ stores, Associated British Foods said the budget fashion chain will welcome customers back to all 153 of its outlets in England on June 15.
Primark joins other retailers including Mike Ashley’s Sports Direct, Debenhams, JD Sports, Next and John Lewis, who are also due to reopen stores.
Primark’s owner Associated British Foods said the budget fashion chain will welcome customers back to all 153 of its outlets in England on June 15
The speed of its resumption of business caught the markets by surprise, sending ABF’s shares soaring 8 per cent, or 146p, to 1967p, making it the FTSE 100’s second biggest riser.
The company has already reopened more than 100 shops across Europe and said it had learned lessons from the experience that would help it in the UK.
Staff will be given protective equipment such as plastic gloves and customers will have to follow social distancing rules, but ABF claimed this would only affect its busiest stores representing about 10-20 per cent of sales.
Stock Watch – Strategic Minerals
Miner Strategic Minerals has been awarded damages and costs of £17.6million after a row with a client over a contract.
The decision was reached by an arbitrator after the firm made a claim against the main customer of its Cobre magnetite operation in the US state of Nevada.
It puts the firm in a strong position to recover the cash after the customers’ assets were seized by US regulators, Strategic Minerals said.
The news sent shares up 12.5 per cent, or 0.08p, to 0.68p.
The firm has further plans to open 37 more shops in Northern Ireland, Scotland and Wales later in June pending ‘further guidance’.
Primark previously said it had gone from £650million sales per month to zero after the pandemic forced it to close.
But yesterday it said: ‘As European governments have begun to ease restrictions on clothing retailing we have been able to reopen stores.
‘Safety has been our highest priority in our detailed preparations to welcome our customers and employees back.’
In other retail news, new Sainsbury’s boss Simon Roberts’s first day received a tepid reaction from markets, with shares zig-zagging between positive and negative territory. Shares closed down 0.2 per cent, or 0.3p, at 193.7p.
Roberts has replaced Mike Coupe, 59, who stepped down at the end of last month after six years in charge.
There was a more upbeat reaction to two announcements by drugs giant Astrazeneca, however, which recently became Britain’s most valuable company.
It was valued at about £133.8billion yesterday. Astra said it had clinched regulatory backing for two medications, including one for a blockbuster cancer treatment.
Lynparza received a recommendation from the European health regulator for use as a follow-on treatment for a form of advanced pancreatic cancer, while heart drug Brilinta received a US approval.
The boost comes as the firm is at the forefront of international efforts to find a Covid-19 vaccine, which it is working on with Oxford University.
Its shares rose 1.5 per cent, or 124p, to 8704p. The FTSE 100 blue-chip index, meanwhile, rose 1.5 per cent, or 89.82 points, to 6166.42, while the domestic-focused FTSE 250 rose 1.4 per cent, or 234.57 points to 17277.53.
But there was gloomy news from manufacturers as a survey showed the sector remained in a funk.
After the coronavirus shutdown brought much of the economy to a halt, May’s IHS Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) came in at 40.7, well below the 50 level that signals growth.
The reading was up from April’s record low of 32.6, however, suggesting the sector was not declining as fast as before.
But new working practices, doubts about how long coronavirus restrictions will last, weak demand and Brexit worries are set to slow the recovery, economists have warned.
IHS Markit director Rob Dobson said: ‘This will make the ‘new normal’ one of the toughest recovery environments many manufacturers will ever have to face.’