Pri­mark paves the way

There is a glim­mer of hope for the high street as re­tail­ers emerge from lock­down

The Daily Telegraph - Business - - Front Page - Ben Mar­low

At last some life in the high street, and from one of the big losers of the pan­demic too. Lock­down has been bad for every re­tailer but it has been wretched for Pri­mark with­out in­ter­net sales to fall back on. While just about every other ma­jor chain on the planet sells on­line, and in in­creas­ing numbers too, Pri­mark has stead­fastly re­fused to join the dig­i­tal rev­o­lu­tion.

When you sell £2 T-shirts, it’s hard to make money on de­liv­er­ies, es­pe­cially when a third are be­ing re­turned.

Pri­mark had man­aged to thrive with its old-fash­ioned pile ’em high, sell ’em cheap store model un­til Covid-19 tore through the econ­omy. The chain has 376 stores in 12 coun­tries and when the last closed on March 22, turnover went to zero overnight.

The cost has been £650m of lost sales a month, £600m of earn­ings, and a cash out­flow of £800m af­ter it was pres­sured into con­tin­u­ing to pay over­seas sup­pli­ers dur­ing the cri­sis.

Yet the re­cov­ery is equally strik­ing, even if it is only early days. Sales plum­meted 75pc dur­ing the quar­ter be­tween March 1 to June 20 but since the chain’s stores started re­open­ing on May 4, cu­mu­la­tive sales in the seven weeks that fol­lowed were £322m, equiv­a­lent to just a 12pc short­fall on last year.

In the fi­nal week when more than 90pc of its stores in Eng­land and Ire­land were trad­ing, sales were £133m, ahead of the same week last year.

True, it is only seven days out of a nearly four-month pe­riod and not every re­tailer is like Pri­mark. The queues for its newly re­opened shops have snaked round the street.

In some towns peo­ple have waited through the night. Brits still love a bar­gain.

But when there is a corona jobs cull sweep­ing through Bri­tain, much of it af­fect­ing the high street, signs of life are in des­per­ately short sup­ply. In the last two days alone, re­tail lu­mi­nar­ies John Lewis and Har­rods have joined Up­per Crust owner SSP, Sir Philip Green’s Top­shop, TM Lewin, and Har­veys, in an­nounc­ing ma­jor re­dun­dan­cies.

A FTSE chair­man told me this week that every big com­pany, in­clud­ing his own, will be lay­ing off large numbers in the com­ing months, for the sim­ple rea­son that they will be un­prof­itable with­out big job cuts. Don’t hold your breath for a V-shaped re­cov­ery.

Amid such gloom, even the im­prov­ing for­tunes of a cheap fash­ion chain pro­vide hope.

Pol­lu­tion re­lief will be tem­po­rary

For a com­pany that flies hulk­ing great alu­minium tubes across the skies, Wizz Air is fond of talk­ing up its green cre­den­tials. In fact, it claims to be the most en­vi­ron­men­tally friendly of all its com­peti­tors.

The air­line says its CO2 emis­sions worked out at 57.9 grams per pas­sen­ger for every kilo­me­tre in the 12 months to June, the low­est of the pack. How­ever, in June, the car­bon foot­print per flier jumped 64.3pc be­cause it has been fly­ing half empty planes. Is this a more re­al­is­tic vi­sion of the fu­ture, rather than the one be­ing ped­alled? It’s com­fort­ing to think that the virus has prompted a col­lec­tive burst of soul-search­ing that will make us all less self­ish.

Even the Prime Min­is­ter has been sucked in with his loose prom­ise to “build back bet­ter, greener and faster” but we live in a con­sumerist so­ci­ety where most peo­ple would pre­fer it if their lives weren’t dis­rupted in the name of the planet. There’s no doubt that lock­down has been good for the en­vi­ron­ment but only be­cause hu­man ac­tiv­ity fell.

Air traf­fic had halved by mid-March and in the same month UK road traf­fic fell by more than two thirds. The skies cleared, the air we breathed was purer, and na­ture re­turned with a vengeance.

But fewer tube and train jour­neys mean more trips by car. If the Gov­ern­ment’s ridicu­lous quar­an­tine mea­sures are aban­doned, there will be a mad rush to book for­eign hol­i­days. A re­luc­tance to visit the su­per­mar­ket has trig­gered a surge in on­line shop­ping. That means more fumes from de­liv­ery vans and in­creas­ing quan­ti­ties of plas­tic and card­board pack­ag­ing. Even pri­vate jet use has spiked.

Re­ces­sions are of­ten fol­lowed by falling green­house emis­sions as con­sump­tion falls, but pol­lu­tion lev­els quickly re­turn once eco­nomic ac­tiv­ity re­bounds. I sus­pect this time won’t be any dif­fer­ent.

Mak­ing cap­i­tal out of cap­i­tals

The weird and won­der­ful world of day trad­ing has ex­ploded dur­ing the pan­demic, fu­elled by dumbed down mo­bile apps such as Robinhood.

These ama­teur in­vestors scoff at the pin­stripes of Wall Street and are con­vinced any­one can make money with a bit of luck. Blog­ger Dave Port­noy chooses his in­vest­ments ac­cord­ing to the let­ters he picks out of a Scrabble bag at ran­dom. War­ren Buf­fett, eat your heart out.

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