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Primark sales down after challenging Christmas for UK retail – The Guardian, Theguardian.com

Primark sales down after challenging Christmas for UK retail – The Guardian, Theguardian.com


Sales at Primark’s UK stores went backwards at Christmas in a further sign of the toll taken on fashion retailers by grim market conditions over the traditionally lucrative trading period.

The no-frills fashion chain suffered a “marginal” decline in fundamental sales and said it would open only one store in the UK this year – the lowest number in decades – as it turns its financial firepower overseas in search of growth.

The Primark update came as high-street suits specialistMoss Brossaid it would make a loss of £ 1m in the current financial year. The chief executive, Brian Brick, said “intensive discounting” by rivals and a big dip in shopper numbers on the high street were behind a 3.2% drop in like-for-like sales in the (weeks to) January.

The plus-sized online specialistN Brown, which owns Simply Be and JD Williams, also blamed wall-to-wall discounting in December alongside problems in its finance arm for a profit warning that knocked nearly 75% off its shares. Its sales finished 5% down in the weeks to 4 January, a performance that shaved £ m off pre-tax profits, which are expected to come in at £ 100 m.

Many retailers, including big high-street names such as John Lewis and Marks & Spencer, struggled to get shoppers to part with their cash in 2019 as political instability and worries over Brexit weighed on consumer confidence. Many retailers resorted to price cuts, and last week Steve Rowe, the chief executive of M&S,complained of “unprecedented discounting”between Black Friday and Christmas.

Analysts saidPrimarkfared better than other UK clothing chains, with sales at established UK stores down by about 0.5% compared with a drop of as much as 2% across the market in the 22 weeks to 4 January. John Bason, finance director at Primark’s owner, Associated British Foods, said the retailer had won business from rivals with its low prices.

However, he admitted the whole fashion market was under pressure as Britons chose to spend their spare cash on other things. “Consumers are given a much bigger choice of things to spend their money on. [Fashion] Is weighed up against that, ”said he. “Most people prioritize a subscription to Netflix or a new iPhone.”

With shoppers spending their money carefully, the cut-price book, craft and toy chain The Works, which issued a huge profit warning in November, said it was putting the brakes on new openings and replacing its long-serving chief executive, Kevin Keaney, with its finance chief, Gavin Peck.

After a tumultuous 2019, sales at The Works – whichonly floated in 2019– actually returned to growth over Christmas, with sales at established stores up 1.5%. That gave a boost to the company beleaguered shares, which have lost 100% of their value in the past months, reducing the company worth to just £ 25 m.

Against this difficult backdrop, Primark said its sole UK opening inwould be in the Trafford Center in Manchester, where it will move into a site formerly occupied by BHS. Bason said it was unlikely to be snapping up the numerous empty Debenhams, House of Frasers or Beales outlets, as it now had 7.5m sq ft of space across the UK.

“We are already very very represented and you have got to have discipline on how much space you have,” continued Bason. “Just because they are there, doesn’t mean you buy it.”

Instead, Primark is focusing on overseas expansion, with new sites in the US, France, Italy, Spain and a move into Eastern Europe. Two stores are set to open in Poland, along with the company’s first outlets in Prague in the Czech Republic.

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