Primark 'likely to clean up from Gap’s exodus' as lockdown lifting triggers sales surge: reaction
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The discount fashion chain’s owner Associated British Foods (ABF) revealed that sales for the retailer hit £1.6 billion for the 16 weeks to June 19, “reflecting an increase in both confidence and willingness to spend by our customers”.
The chain, which has 20 stores in Scotland, saw like-for-like sales rise by 3 per cent against pre-pandemic levels from the same quarter two years ago.
Primark started the quarter with only one in five stores trading due to lockdown restrictions, with all of its stores now reopened.
The group said it was particularly buoyed by “pent-up demand in the early weeks after reopening” and is expecting trading to steady now restrictions have been significantly eased.
In an update to investors, ABF said: “The relevance and appeal of our value-for-money offering has been evidenced by the number of customers that have returned to shop in person in our stores, across every one of our markets, each time we have reopened post-lockdown.
“This reopening has also seen a resurgence in demand for fashion across womenswear and menswear, as customers start to step out of lockdown leisurewear.”
It added: “There has been a strong response to our two hero womenswear ranges for spring/summer, Joyful Gelato and Garden Party, with the pink gingham and purple blazers selling out within weeks supported by digital marketing.”
ABF bosses said that the firm now expects Primark’s profit for the full year, before the repayment of furlough funds, to be “broadly in line” with last year’s figures.
Primark’s continued success, despite the lack of a heavy online selling presence, comes in stark contrast to Gap, which has announced plans to shut all of its UK stores.
Susannah Streeter, senior investment and markets analyst at financial services group Hargreaves Lansdown, said: “The Gap-sized hole in the high street which will be left when the US retailer closes its final stores at the end of September will be hard to fill, given the big names which have already left bricks and mortar shops behind.
“But Primark, one of the big fashion chains left standing, its likely to clean up from Gap’s exodus, attracting browsing shoppers whose options are dwindling. It is still turning heads on the high street, while one by one other fashion retailers fall by the wayside.”
Chris Beckett, head of equity research at Quilter Cheviot, said: “Primark’s sales are ahead of pre-pandemic levels, and naturally saw very strong growth in the UK, France and Italy compared to 2020, however this has been offset by weakness elsewhere in Europe where greater restrictions remain.
“While sales trends have moderated and footfall begins to ease off as we get back to more normal conditions, Primark does appear to be a winner from the mass of savings accumulated by consumers.
“We might not be seeing the queues outside their shops stretching around the corner anymore, but the size of their baskets purchased by consumers has increased and remains ahead of normal.”