Primark to trial Click & Collect but online delivery still off the agenda

By James Davey

LONDON (Reuters) -Budget fashion chain Primark will trial a Click & Collect service on children's products in the United Kingdom but said the move should not be seen as a precursor to an online delivery offer.

Parent Associated British Foods said on Monday the Click & Collect trial will take place in up to 25 stores in the northwest of England towards the end of the year.

The service will build to offer customers an expanded range of 2,000 options across children's clothing, accessories and lifestyle products. Around 40% will be exclusive to Click & Collect.

Primark reckons the service has the potential to satisfy unfulfilled demand, driving footfall from both existing and new customers to deliver incremental sales in stores.

"What we're trying to do is use Click & Collect to increase the offer in the category where we're very strong but where we're still constrained," AB Foods CEO George Weston told Reuters.

"We'll give shoppers more reasons to buy more products and visit our stores more often."

If the trial is successful, the children's offer will be rolled-out nationally. Other product categories could then follow.

The move builds on Primark's enhanced digital capability with its website having been revamped earlier this year.

But Weston said home delivery remained off Primark's agenda as the economics don't stack-up for its low price points.

"We think that that is very expensive, inefficient and environmentally iffy," he said.

Shares in AB Foods were up 0.2% at 0911 GMT.

The group, which also owns major sugar, grocery, agriculture and ingredients businesses, maintained its full-year guidance after trading in line with expectations in its third quarter to May 28.

Group revenue increased by 32%. Sales in its food businesses increased 10% which reflected price actions to recover input cost inflation and volume increases in the ingredients business.

Primark sales increased 81%. All Primark stores traded during the period in contrast to last year when most stores were closed until the middle of April due to COVID-19 lockdowns.

Primark's UK sales increased 61% and were 2% ahead of pre-COVID levels three years ago.

AB Foods' finance chief John Bason forecast further improvement in Primark's UK performance in the fourth quarter, with little impact from the cost of living crisis so far.

"Frankly, in our trading at the moment I don't think we are seeing too much evidence of that," he said, highlighting strong sales of swimwear, sliders and beach towels.

The group forecast "significant progress" in full-year adjusted operating profit.

(Reporting by James Davey; editing by Kate Holton and Ed Osmond)