Primark sales zip to £7bn
Rival’s bottom line plunges
TWO of Britain’s biggest budget fashion chains revealed vastly different results yesterday.
Sales at Primark jumped 12% to more than £7billion last year, boosted by a wave of new stores here and abroad. Takings in UK shops open at least a year rose 4.5% in the 12 months to midSeptember, including a near 7% leap in the second half. And Primark defied tough times elsewhere, too. Struggling fashion chain New Look plunged £10.4million into the red in the six months to September 23, from a £59m profit a year ago, as sales dived 8.4%. Last week, rival Next revealed “extremely volatile” trading as high street sales dropped 7.7% in the past three months. Primark, which recently launched an interiors range with YourTube star Saffron Barker, right, helped buck the trend by not raising prices, despite the weak pound pushing up the cost of imported clothes. But it wasn’t all good news for the firm. That decision did dent the company’s profit margin, which fell from 11.6% to 10.4%. And shares in the chain’s owner, Associated British Foods (ABF), dived 3.7% yesterday as it announced plans to cut the size of three US Primark stores. America is an important part of the chain’s international expansion. The announcement came as ABF said Brexit was set to deliver a big boost to its business.
The weak pound has driven up Primark’s costs, but 60% of ABF’s business is abroad. That fuelled profits last year, which jumped 22% to £1.3bn.
ABF also said Brexit meant “significant opportunities” for UK food manufacturers as sterling’s weakness made imported grub more expensive. ABF makes Silver Spoon sugar, Jordan’s cereals, plus Blue Dragon and Patak’s sauces here.
ABF finance chief John Bason said: “There are real opportunities from Brexit for agriculture and the food industry.” Marks & Spencer will announce its half-year results today.
Neil Wilson, at ETX Capital, said Primark’s sales were “recession-proof, whatever the economy is like”.
But analyst George Salmon, at Hargreaves Lansdown, warned the cutting of the US stores was the “first sign of cracks in the chain’s ambitious and potentially lucrative plans” to conquer the American market.
New Look boss Alistair McGeorge, who has been parachuted into the role of executive chairman, said its results reflect a “challenging retail environment on the UK high street”. McGeorge returned to the firm after the abrupt departure of chief Anders Kristiansen in September.