Early sales joy for Primark as consumers snap up shorts and T-shirts

Sales at Primark have been “encouraging” after the reopening of stores, despite parent company Associated British Foods (ABF) predicting a hit to profits.

People queue outside the Primark store on Princes Street in Edinburgh, which reopened earlier this week. Picture: Jane Barlow/PA Wire

ABF said the chain, which has been reopening its Scottish branches this week, has been boosted by strong sales of children’s clothes and leisurewear but that sales for the past quarter plummeted 75 per cent to £582 million as a result of the virus pandemic and Primark’s lack an online presence.

The group said total sales across its divisions had fallen by 39 per cent to £2.6 billion for the quarter to 20 June, compared with the same period last year.

Only eight of its 375 Primark stores have not yet reopened, while the group reported “reassuring and encouraging” trade from outlets which have welcomed customers again.

Customer demand has also been strong for summer clothing such as shorts and T-shirts, while sales of formalwear have been weak.

It said sales in the first week of reopening in England and Wales were “ahead of the same week last year” after raking in £133 million from customers. But ABF warned that the Covid crisis could knock more than £600m off Primark's operating profit for the year.

Richard Hunter, head of markets at Interactive Investor, said: “AB Foods will be greatly relieved to have its jewel in the crown restored and the very early signs are that Primark is picking up largely where it left off. However, the pandemic has left a financial stain which cannot be erased from this year’s trading.”

Adam Vettese, analyst at multi-asset investment platform eToro, said: “Perhaps the eight most important words in Associated British Foods’ latest trading update are: ‘Nearly all Primark stores are now trading again’.

“The budget fashion brand is so important to ABF that it has become affectionately known as the group’s ‘golden goose’.

“The problem was that without an online presence, Primark was the golden goose that stopped laying eggs, which is why the group-wide figures are down so much.

“Strip out Primark, however, and ABF’s grocery, sugar and Ingredients divisions have actually done reasonably well. But of course, the news shareholders really wanted was that Primark was nearly back to firing on all cylinders, even if it takes a while for its sales and profits to recover.”

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said Primark was “back in business” noting: “There’s a lot to like in these numbers – and it’s the first time we’ve been able to say that in a while!

“Yes Primark sales are down dramatically in the third quarter, but trading in the first few weeks of June looks very promising and with almost all stores now open that provides a strong base for recovery.

“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. 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.”

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