Yahoo Finance High street back from dead as Primark sales soar by £1bn
SURGING sales from two of Britain’s top retailers suggest there is life on the high street yet, even as US giant GAP said it would close all 81 stores in the UK and Ireland to shift online only.
Primark, which has famously shunned the internet as a sales vehicle, added £1 billion of sales in the last three months alone.
JD Sports said trading has been “particularly encouraging” in the UK since lockdown eased as it said profits for the year will be at least £550 million, up from £324 million last time.
Primark sales rocketed 207% to £1.6 billion in the third quarter, £1 billion up on a year ago as stores re-opened.
John Bason, finance director of parent company ABF, thinks Primark could boom yet further as the economy re-opens.
“Fashion has come back, the thing that we have not seen yet, people are not buying for foreign summer holidays, they are not buying office wear,” he said. “When they do, we will benefit.”
London has done well, but shops outside of town better than Oxford Street, which is taking longer to get back up to speed due to the lack of tourists.
Bason said he was “sad to see Gap go”, since Primark gains from having other stores nearby. It is unlikely to pick up any of Gap’s soon to be vacant estate. “We’re happy with the bricks and mortar estate we have,” he said.
Gap was a big hit when it first arrived in the UK in 1987, but has struggled to cope with cheaper rivals and the internet.
ABF has repaid £71 million of furlough money and notes a higher level of attrition among staff than it would have expected, a sign that the retail jobs market is booming.
Primark’s international expansion continue apace with new stores in Rome, Chicago and Poznan among others. ABF shares rose 107p to 2321p.
Susannah Streeter at Hargreaves Lansdown said:
‘’The GAP sized hole in the high street which will be left when the US retailer closes its final stores at the end of September will be hard to fill, given the big names which have already left bricks and mortar shops behind.
But Primark, one of the big fashion chains left standing, its likely to clean up from GAP’s exodus, attracting browsing shoppers whose options are dwindling. It is still turning heads on the high street, while one by one other fashion retailers fall by the wayside.”
A report today from Alvarez & Marsal estimates that UK retailers will see profits fall by £8 billion by 2025.
Richard Fleming at A&M, said: “COVID-19 has wrought irreversible change which has left the future of many retailers hanging in the balance. Those businesses that will remain relevant and survive the disruption will be those that are able to realign operating models with the new normal and meet the needs of a post-pandemic consumer – but there will be an inevitable shake out of those that cannot do so before it’s too late.”
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