Primark reports record sales as Covid lockdown eases in England and Wales
Primark reported record sales last week when non-essential retailers were allowed to reopen in England and Wales, with shoppers eager to buy spring and summer clothes, as well as stay-at-home staples.
Associated British Foods, which owns the clothing and homewares retailer, said more than half the stores broke their own sales records, as many of them offered extended opening hours. Large queues formed outside some shops before 7am on 12 April, following a three-month closure because of the latest coronavirus lockdown.
The retailer set out the cost of the pandemic, saying it had taken a £3bn hit to sales and lost £1bn of profit in the past 12 months, but that all of its 65,000 jobs globally were saved thanks to job retention schemes in the UK and Europe.
The company intends to repay £121m for this year, including £72m to the UK government, following the reopening of shops. Last year it received £98m.
George Weston, the ABF chief executive, said: “Primark sales after store reopenings demonstrate the relevance and appeal of our value-for-money offering.”
Demand for nightwear, lingerie and leisurewear continued to be strong, but customers also snapped up the new spring and summer ranges, in particular womenswear, which had been promoted on Primark’s social media channels.
Basket size increased compared with pre-Covid levels, and the company also stressed that shopper numbers across Primark’s high street, shopping centre and retail park outlets bounced back to 2019 rates.
Primark’s English and Welsh stores represent 40% of its total retail selling space; its 20 stores in Scotland are expected to reopen on 26 April.
However, progress in the eurozone has been mixed, where new lockdowns to stem a third wave of Covid infections have been imposed in France, Germany and Italy. In the Netherlands, Germany and Belgium, shops are open but customers have to pre-book, under a “click-and-meet” system.
Primark also had strong sales over the festive period when all Christmas and gifting products sold out and nightwear and loungewear sold well. This meant it discounted less in the subsequent sales. About £260m of autumn and winter staples such as pyjamas and soft slippers, which were not delivered to the stores, will be held over and sold later this year.
The retailer expects to have 68% of its retail selling space open by the end of April, which rises to 79% if shops with restricted trading are included. Its revenues in the 24 weeks to 27 February fell by 40% to £2.2bn, while adjusted operating profit slumped by 90% to £43m. Like-for-like sales were down 6% in the UK and 20% in the eurozone. The firm took an inventory charge of £21m for autumn and winter clothes on display in closed stores that it was unable to sell.
ABF’s food businesses fared better, recording a 30% rise in adjusted operating profit. The group said people, stuck at home, drank more tea and Ovaltine, and Twinings revenues were ahead of the previous year, driven by the popularity of herbal and fruit infusions and surging demand in France.
Customers also bought more Jordans and Dorset Cereals, Ryvita crispbread and Patak’s and Blue Dragon curry sauces, as well as home baking products in the UK, including Silver Spoon sugar. ABF’s overall pretax profit fell by 7% to £275m.