Primark and Ladbrokes warn of steep costs from second lockdown

Primark will be hit particularly hard by a second lockdown as it does not sell clothes online

Britain's blue-chip companies are already counting the cost of the UK’s second lockdown, with the owners of Primark and Ladbrokes predicting a significant profit hit from a loss of sales. 

Associated British Foods, which owns Primark, said it would take a £375m hit from the enforced closures of its stores in the UK and elsewhere in Europe. 

Meanwhile GVC, the betting group behind the Ladbrokes and Coral brands, warned it could take a £34m profit hit if the lockdown lasts for a month, forcing all of its high street betting shops to shut. 

The updates highlight the severe effect a second lockdown will have on UK plc. However, they also show that businesses are better prepared to forecast the impact of a second lockdown compared to the initial one in March. 

Retail, leisure, hospitality and travel stocks sank as investors reacted to Boris Johnson’s announcement.

JD Sports led fallers on the FTSE 100 in early trading on Monday, while travel food group SSP was among the FTSE 250’s biggest fallers.

Companies exposed to closures and a decline in footfall including Cineworld, JD Wetherspoon and Mitchells & Butlers also dropped.

If Parliament approves the Government's proposed lockdown of England, ABF said around 57pc of selling space in its Primark stores would be temporarily closed. 

Its stores in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia are already temporarily shut, which represents about a fifth of its selling space. 

Primark will be hit particularly hard by a second lockdown as it does not have an online business to allow it to trade during the shutdown. 

"Uncertainty about further temporary store closures in the short term remains," ABF added. 

The retail giant is putting in place plans to "manage the consequences of closures" and is moving to reduce costs.

GVC said that the impact from closures in other UK regions would be £27m and £10m in its European market. 

While betting firms will be forced to shut their high street shops, they will be less affected by the latest measures as professional sport will continue, unlike the first lockdown. 

There are growing concerns however that the new restrictions could last longer than four weeks, with Boris Johnson saying he will only "seek to" end the national curbs on Dec 2. 

Shares in GVC fell 1.7pc to 949.8p, while ABF declined 2.8pc to £16.49.