Primark Says Its Market Share Has Increased Since Covid-19
(Bloomberg) -- Primark has increased its market share above pre-Covid levels after the low-cost fashion chain owned by Associated British Foods Plc reopened stores and attracted people seeking clothes to wear at home.
Shoppers are buying more products, and sales of nightwear and loungewear are rising, AB Foods Finance Director John Bason said in an interview Monday. Strong demand after reopenings will help boost annual operating profit toward the top end of the company’s forecast range.
Shares of Associated British Foods rose as much as 6.2% in London.
Primark, known for rock-bottom prices for basic clothing and fashion, is outperforming rivals even though it relies fully on physical stores and has no online presence. While the chain missed the recent surge in internet shopping, Primark has been successful in luring customers back to stores when they reopened after lockdowns in June and July. In late August, about 1,000 lined up as the seventh Primark location in Paris opened, Bason said.
Still, full-year sales are down from the previous year. Revenue in the U.K., Primark’s largest market, is expected to be 12% lower on a comparable basis in the year through Sept. 12. The company also expects a significant decline in earnings per share.
“We’re still in a very fluid situation,” Bason said.
The chain had a last-minute rush on back-to-school clothing once it was apparent schools would indeed open, the finance director said. A decline in women’s fashion is moderating, and the company plans to continue avoiding big markdowns.
Primark plans to lower a previously announced charge for inventory in stores after the better-than-expected sales. Bason said the 284 million-pound ($375 million) writedown will be “much, much reduced.”
Stores that depend on tourists are still struggling. Before Covid-19, they brought in 13% of sales. After reopening, that’s down to 8%.
Primark’s full-year adjusted operating profit will be at least at the top end of its forecast range of 300 million pounds to 350 million pounds, AB Foods said.
©2020 Bloomberg L.P.