Comment: Success for Primark and Sports Direct

TWO of Britain’s most luminous retail success stories share a seemingly tungsten template. They pile it high, are sharply competitive on price, very brand-conscious and target a younger demographic that wants fashionability without breaking the bank.

Martin Flanagan

In addition, their joint success is 
not diminished by store layouts and shopping experiences that can occasionally veer on the slightly chaotic and strident.

Fashion retailer Primark and its sporting peer Sports Direct were on smooth, money-making auto-pilot again yesterday as years of high street outperformance continued.

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Primark pulled the struggling sugar business of parent company Associated British Foods (ABF) out of a hole, and far from the first time.

Low sugar prices drove down profits substantially in that division, operating in something of a twilight zone ahead of European Union tariff reform in 2017. But Primark again picked up the torch for ABF, with operating profits jumping 26 per cent. Not content with its British success, Primark revealed it is also to open its first American stores next year, having already established itself in nine countries across Europe.

Although many UK retailers have foundered in the US, you would bet that the fashion discounter would have a decent chance of making a go of it, particularly as its first Stateside shops are planned for the more self-consciously fashionable US north-east.

Meanwhile, Sports Direct, whose founder chairman Mike Ashley also owns Newcastle United FC, revealed total sales rose 10 per cent in its latest trading quarter, with core sports retail sales up 11 per cent.

Sports Direct’s latest performance has been a little overshadowed by friction between the company and the City about its rejection of a lucrative bonus scheme for Ashley, and his recent wheeling and dealing in the shares of department store groups Debenhams and House of Fraser.

The company even referred to the row in its trading update. But in some ways that is a shame. Sports Direct, after an initially troubled flotation some years back, has performed consistently well.

The shares are up 89 per cent on a year ago, and its international growth has also been impressive. The success of both retailers is all the more remarkable given the catalogue of those that have collapsed in recent years, brought low by economic headwinds and the grim reaper for many in the sector that is the internet.

Barratts Shoes, Blockbuster, Clinton Cards, Comet, HMV, Jessops, JJB Sports and La Senza are just some who found their basic model wanting amid consumer pressures and systemic shopping change.

In a contrast as vivid as their product colours, Primark and Sports Direct have simply ploughed a profitable furrow through the static.