Primark sales in England and Wales hit record levels in the last week after stores there were able to reopen from lockdown 3.0, its parent company says today. More than half of its individual stores broke their own sales records, says Associated British Foods (ABF), as shoppers returned in-store at a time when more than half of the UK population is at least part-vaccinated.
The retailer saw footfall return to pre-Covid across its high street, shopping centre and retail park sites in England and Wales, while basket sizes were also higher than before Covid.
The role of digital
Digital has played a part as social media channels have raised awareness of its new spring and summer trends. Demand for nightwear, lingerie and leisurewear were all strong, but, contrasting with previous reopenings, demand was also high for fashion ranges, particularly in womenswear.
Now the retailer is planning to invest more in digital, improving both the content on its website and its digital marketing.
“With more than 22m highly engaged followers across the Primark social channels, digital plays an important role in our business, showcasing our latest ranges, building engagement and driving customers into store,” said ABF chief executive George Weston in today’s half-year statement.
“As we look ahead, we are actively exploring ways to leverage our digital channels to support our plans for growing our store estate. This will involve investing in our website and digital marketing to help us target content and communications to customers.” ABF says it is “very optimistic” about the opportunities for growth. Store openings are currently focused on southern and eastern Europe – including eight new stores in Italy by 2022 – as well as in the US.
Primark remains focused on safety, extending opening hours across most stores in order to spread demand and reduce queues. By the end of April, 70% of Primark stores are expected to be open, including 20 in Scotland on April 26 and nine in Northern Ireland on April 30. Trading is restricted in a further 10% of stores.
ABF now plans to repay £121m claimed from coronavirus job retention schemes in its financial year to date – including £72m to the UK government. It says such schemes, from which it also claimed £98m in its previous financial year, have helped it to protect 65,000 jobs in its workforce. The repayment comes although Covid-19 lockdowns have cost it more than £3bn in sales, and more than £1bn in profit at Primark over the last year. The impact on retail clothing sales is partly offset by an “exceptional” performance in its food business.
Thirty members of ABF staff have died from Covid-19 over the last year.
The update comes as Associated British Foods (ABF), which owns Primark, today reported sales of £6.3bn in the 24 weeks to February 27 2021. That’s 17% down on the same time last year and driven by the repeated closures of Primark stores in lockdowns. Closures of Primark stores are estimated to have cost £1.1bn in lost sales in the first half, while like-for-like sales in stores were restrictions were down by 15% LFL.
Pre-tax profits of £275m were 8% down on the same time last year. Primark’s profits were down by 40% at £2.2bn, with adjusted operating profits coming in at £43m – 90% lower than the £441m it reported a year earlier.
In the second half of its financial year year, ABF expects sales of £700m will be lost as a result of Primark store closures and restrictions.
ABF chief executive George Weston says: “With most of the Primark stores closed for more than half the period, the management team demonstrated operational agility in response to the measures employed by governments to tackle the pandemic. Primark sales after store reopenings demonstrate the relevance and appeal of our value‐for‐money offering. We are excited about welcoming customers back into our stores as the lockdowns ease and are delighted with record sales in England and Wales in the week after reopening on 12 April. With our success in a number of new markets, as wide‐ranging as Poland and Florida, we are as convinced as we have ever been in the long‐term growth prospects for Primark.
“Looking ahead, with stores reopening and Primark once again becoming cash generative, our confidence is reflected in our decisions to repay the job retention scheme monies in respect of this financial year and to declare an interim dividend.”
ABF says its businesses were well prepared for the end of the Brexit transition period that it has seen “no material disruption to our supply chains” as a result. However, it says: “We have experienced a small increase in the administrative costs of trading and in limited cases duties related to our trading with the EU.”