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Ahead of the wave of Christmas trading updates, Associated British Foods has announced the tightening of coronavirus restrictions will cost the group an extra £220m on top of the previously announced £430m.
ABF updated the market on New Year’s Eve in the light of the announcements on 30 January by the UK and Republic of Ireland governments regarding increased restrictions on the movement of people and trading activity to limit the spread of COVID-19
It said that as of 1 January, 253 Primark stores are temporarily closed, representing 64% of its total retail selling space.
The estimated loss of sales for these stores for the announced periods of closure in its financial year is now some £650m, up from £430m announced on 4 December.
ABF will provide an update on trading for both Primark and its other businesses on 14 January.
Responding to the update, broker Shore Capital said it expects to be downgrading its 2021 earnings expectations on or after the 14 January due to the developments at Primark.
However, it reiterated its ‘buy’ stance, advising investors to “take advantage of any markdown in the ABF share price as equity markets reopen, should that occur, to participate in a fundamentally high quality stock, one where Primark in particular is set to be a winner”.
ABF shares fell 1.6% to 2,264p on 31 December and are up 0.3% to 2,271p so far this morning.
Morning update
The agreement of a trade deal between the UK and EU saw the FTSE 100 rise to post its highest post-coronavirus closing level of 6,602.7pts on 29 December, before falling back 1.5% on 31 December to 6,460.5pts.
On the markets this morning, the FTSE 100 has opened strongly, up 1.9% to 6,581.6pts.
Early risers include Diageo, up 3.2% to 2,970.5p, Pets at Home, up 3% to 428.6p, DS Smith, up 2.3% to 383.3p and Kerry Group, up 2.1% to €120.90.
Fallers so far include Marston’s, down 2.7% to 73.6p, C&C Group, down 1.8% to 223.5p and Nichols, down 1.5% to 1,330p.
Market news is scarce ahead of a wave of Christmas trading updates over the next two weeks.
HelloFresh has announced it has successfully completed the acquisition of US-based ready-to-eat meal company Factor75.
On November 23, 2020, US subsidiaries of HelloFresh had entered into an agreement to acquire all of the outstanding equity interests of Factor75.
The completion of the acquisition of Factor was subject to customary conditions precedent. As all of these conditions precedent have been fulfilled in the meantime the closing/ completion of the transaction occurred on 31 December.
Factor is a leading provider of fully-prepared, fresh meals that “combine health, convenience and restaurant-quality taste”.
This week in the City
Morrisons is first in the queue to update the market on its festive sales performance as it releases its full year sales figures tomorrow morning. Its major supermarket rivals are not releasing figures until next week.
Retail bellwether Next will also post its Christmas trading numbers tomorrow morning.
Wednesday brings the publication of the latest Kantar and Nielsen grocery market share figures for the month of December. High street food-to-go stalwart Greggs is also scheduled to issue a trading update on Wednesday.
Marks & Spencer will update the market on its third quarter performance, including the vital festive period, on Friday morning.
In the US, Boots owner Walgreens Boots Alliance will post its first quarter earnings on Thursday.
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