Primark has brushed off the woes engulfing the High Street — pressing ahead with store openings and ordering £1 billion of new stock, while rivals shut shops and slash jobs.
The fashion retailer saw sales slump by 75% to £582 million in the third quarter as the UK lockdown hurt the stores-only retailer — but it said trading since reopening has been brisk and better than last year.
It has reopened 367 UK stores more rapidly than it had expected to, and demand for kids’ clothes and leisurewear has been healthy.
Huge queues outside its stores when non-essential retailers were allowed to reopen on June 15 are in stark contrast to news this week of job cuts and store closures at retail stalwarts including John Lewis, Harrods and Topshop owner Arcadia.
John Bason, finance chief at Primark owner ABF, said trading in England had been “reassuring and encouraging”.
He also pledged that there would be “no fire sale” of stock which has sat in shut stores for months, and committed to buying £1 billion of future stock, including £800 million of autumn/winter ranges.
Primark has suffered more than rivals during the virus crisis as it has no online presence. Its annual profits are now estimated to be around £300 million to £350 million compared to £913 million last year. ABF shares were the biggest riser on the FTSE 100, up 5% at 2057p.
The retailer has opened a new store in Manchester’s Trafford Centre and is pressing ahead with opening five new stores in the US, France and Poland.
Overall ABF’s quarterly revenues were down 39% to £2.6 billion, aided by a strong performance in its grocery arm, which includes the Twinings tea brand, as supermarkets saw a surge in demand. So far this year, group revenues are down 13% to £10.2 billion.
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said: “The fact Primark has been able to return to sales without significant discounting is encouraging in our view, but while we see the recent performance as strongly positive there’s still a long way to go.
“A low price points might provide some insulation against a major economic downturn, but we still worry about the state of the global economy and what that could mean for all retailers over the medium term. Given those concerns ABF’s substantial cash pile is very welcome.”
The retailer was this week forced to close two stores in Leicester following the lockdown there.
Bason said: “We were prepared for some closures on a local basis. It should be expected that we will have more situations like this on a regional basis.”
Bason added it would not wait for Government advice before closing other stores during Covid flare-ups. “It’s not about waiting for Government. What we have done across Europe is act in a very responsible way.”