By Lina Saigol
A series of U.K. companies across the airline, retail and hospitality sectors warned of a hit to profits on Monday, as they raced to count the cost of the nation’s latest COVID-19 lockdown, which comes into force this Thursday.
Under the new restrictions , restaurants, pubs, entertainment venues and nonessential shops in England will have to close until Dec. 2, although cabinet office minister Michael Gove has said the restrictions could extend beyond that date.
Chancellor Rishi Sunak has extended the government furlough program for the length of the lockdown, making grants of up to £3,000 a month for companies forced to close their doors.
Adam Marshall, director general of the British Chambers of Commerce, said the new restrictions will be a “devastating blow” to business communities who have done everything in their power to adapt and operate safely.
“Business and market confidence have been hit hard by the unclear, stop-start approach taken by governments across the U.K. over the past eight months, with little end in sight,” Marshall said.
”Many firms are in a much weaker position now than at the start of the pandemic, making it far more challenging to survive extended closures or demand restrictions,” he added.
His comments came as Ryanair /zigman2/quotes/204098489/composite RYAAY -1.83% said on Monday that it faced a “hugely challenging” winter as governments across Europe imposed travel restrictions to curb the spread of the virus.
Associated British Foods /zigman2/quotes/204493701/delayed UK:ABF +0.91% , the owner of clothing retailer Primark, said it estimated it would lose £375 million ($484 million) of sales from temporary closures of its stores in major markets because of COVID-19 restrictions.
Helen Dickinson, chief executive of the British Retail Consortium, said retail faces “a nightmare before Christmas” as the government proposes to close thousands of retail premises under this new national lockdown, denying customers access to many of their favorite shops and brands.
“It will cause untold damage to the high street in the run up to Christmas, cost countless jobs, and permanently set back the recovery of the wider economy, with only a minimal effect on the transmission of the virus,” Dickinson said.
Meanwhile, GVC Holdings , the owner of the Ladbrokes Coral betting group, warned on Monday of a £43 million hit to the profit of its gambling stores.
However, shares in Ocado /zigman2/quotes/207225647/delayed UK:OCDO +2.72% leapt 6% on Monday, as it upgraded earnings forecasts and investors saw greater demand for its online groceries amid the new lockdown measures. Gear4Music /zigman2/quotes/201690249/delayed UK:G4M -1.45% was also in demand, surging more than 8%, as it saw strong sales as people stuck at home turned to musical instruments to keep them busy.
“Drilling down into the U.K. equities space, it is clear to see that investors are sifting through the market looking for lockdown winners and dumping lockdown losers,” said Russ Mould, investment director at AJ Bell.
“Supermarkets are going to be in demand once again, with chatter that big queues already started to form over the weekend. Sales could improve for this sector over the coming month, but costs are also likely to be higher as companies likely reintroduce measures to help keep customers safe and crowds under control,” he added.