The bosses of retail giant Primark have warned they could suffer from stock shortages later on in the year if the coronavirus (COVID-19) outbreak is prolonged.
Associated British Foods, the company that owns the huge UK clothing chain, relies on factories in China for many of its products across its companies, but said it's built up inventories ahead of the Chinese New Year holiday as normal, and expects no short term impact.
However, if the virus outbreak continues until those stocks are depleted, there could be shortages across some of its businesses that rely on stock from China later in the year.
The company's latest trading statement said: "Following the outbreak of COVID-19 in China, our main priority is the health and safety of our colleagues and we are taking all possible actions to support them.
"At the same time, each of our businesses are closely monitoring the current and potential effects on their operations of the outbreak. The effect on supply chains for businesses dependent on Chinese sourcing continues to evolve."
It continued: "Primark sources a broad assortment of its product from China.
"We typically build inventories in advance of Chinese New Year and, as a consequence, are well stocked with cover for several months and do not expect any short-term impact.
"We are working closely with our suppliers in China to assess the impact on their factories and supply chains and their ability to fulfil our current orders.
"If delays to factory production are prolonged, the risk of supply shortages on some lines later this financial year increases. We are assessing mitigating strategies, including a step up in production from existing suppliers in other regions."
Despite the unknown factors in China, the rest of the statement spoke broadly of success for Primark.
It announced that sales across the retailer are expected to be 4.2 percent up on last year. This is thanks in part to selling at a relatively constant like-for-like rate (i.e. sales are roughly the same in stores that were already open the previous years), while increasing the amount of retail space.
The high-street giant will continue to expand this year, too.
In January, it was announced that 18 new Primark stores are to open this year.
That includes a gigantic store in Manchester's Trafford Centre, as well as branching out into European countries like Poland and Slovakia, and continuing their efforts across The Atlantic in the United States.
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