Profit warnings from firms across Europe mount as Covid-19 bites

A string of retailers, pub and restaurant groups in the UK and across the rest of Europe have issued profit warnings as the coronavirus pandemic takes a mounting corporate toll.

Inditex, the Spanish retail giant that owns chains including Zara, has taken a €287m provision in relation to the virus. The company, which is the world’s largest fashion retailer, with brands including Bershka and Massimo Dutti, said sales in its stores and online plunged 24% between 1 March and 16 March.

The company has suspended its dividend to shareholders and will divert the cash to strengthen its balance sheet. As the world goes into lockdown, the group has closed 3,785 stores in 39 markets. In total, it has 7,469 stores in 96 markets.

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Sodexo, one of the world’s largest catering groups, warned that the virus could cost €2bn in lost sales. The French company, which has clients including Ascot Racecourse and the US Marine Corps, suspended its annual forecast.

European stock markets dropped in early trading, with the FTSE 100 index of blue-chip shares losing 190 points, or 3.5%, at 5,104 points. The jet engine manufacturer Rolls-Royce was the top faller in London, down 18% at 312p, after JP Morgan cut its target price on the stock from 350p to 250p. Supermarkets rallied, though, with J Sainsbury up 8.5%.

A string of UK pub and bar chains joined the chorus of warnings on Wednesday, with the government’s call for the public to stay at home effectively shutting down social life in Britain.

  • Restaurant Group, the owner of Wagamama, said that sales are “getting worse by the day” and forecast revenues down a quarter this year.

  • The pubs group Marston’s, known for its Hobgoblin and Lancaster Bomber beers, said it expects a significant fall in sales in the coming weeks.

  • Mitchells & Butlers, which owns the All Bar One, Browns and Harvester chains, said recent trading has been “severely impacted” by the spread of the virus and that it would no longer provide guidance on financial performance for the year.

  • Revolution Bars Group warned of a “material deterioration” in trading this year. It is taking measures, including a “reduction in payroll costs”, and is cutting entertainment and door staff.

  • The beleaguered retailer Superdry warned investors that it will not meet its guidance of £5m to £6m in sales per week it forecast in January. The company said that 78 stores across Europe are shut. Stores remain largely open in the UK, which accounts for 50% of sales, but US customer traffic is falling on average by 25% week on week as the virus spreads.

  • On Monday, Debenhams asked landlords for a five-month rent holiday. The owner of the fashion chain Primark, Associated British Foods, said the outbreak would hit sales across Europe. It said 72 stores accounting for 20% of selling space were now closed in Italy, France, Spain and Austria.

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