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“Back with a bang” -- Primark on the up as Oxford Street booms

Primark’s parent company, AB Foods, has reported a strong year (Liam McBurney/PA) (PA Wire)
Primark’s parent company, AB Foods, has reported a strong year (Liam McBurney/PA) (PA Wire)

PRIMARK’S focus on the high street and on cut price fashion looks set to make it one of the retail winners in the post-pandemic world as shoppers on the hunt for a bargain flock to its stores.

John Bason, the finance director of parent group ABF said people are enjoying the thrill of being in actual shops instead of waiting for deliveries at home.

“Not only are they back, they are back with a bang,” he told the Standard. “We have consigned those bad Covid days to the past. Oxford Street is doing incredibly well.”

Sales at its 419 stores should rise 16% to £4.2 billion in the half-year to March 4, which suggests consumer spending is holding up better than economic pessimists have feared.

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The group now expects profits for the year to be flat – previously it had guided for lower earnings. ABF, which owns Twinnings tea and Silver Spoon sugar, saw its shares rise 30p to 1977p, which leaves the business valued at £15.5 billion.

Clive Black at Shore Capital said: “It is marvellous to see management state that trading in the discount apparel business was ‘good in all its markets, well ahead of expectations’. Such comments with warm mood music around spring and summer ranges, could be a notable boost to investor confidence.”

ABF has faced inflation issues in both its clothing and food arms, but cost pressures seem to be easing.

Higher interest rates are helping its cash balances, which means it has capital to strike if it sees deals that should be done.

Richard Hunter at interactive investor said: “The journey is not all plain sailing, of course, and the strength of the US dollar has had a particular impact on costs, such as freight rates and buying goods from Asia, while elsewhere labour and energy costs continue to outweigh any price increases which the group has been able to pass on to the consumer.”

Primark has long been criticised for not having a full internet offering. Bason said: “I think people need to get over this. The numbers say it for use, let’s move on. The model is in very strong form.”

The company also sees far fewer returns than online rivals, analysts note.

Primark did strike a cautious note on the near future.

“Looking ahead to the second half, we remain cautious about the resilience of consumer discretionary spending in the face of continuing inflation in the cost of living and higher interest rates.”

It added: “Our expectation is that like-for-like sales growth in the second half will be lower than that achieved in the first half but, based on our experience to date, will be better than our previous expectation.”