Primark unlikely to continue with Asos online collaboration
Wednesday 06 November 2013
The boss of Primark’s parent company has hinted that a trial to sell its clothes through online fashion retailer Asos is unlike to continue.
George Weston, chief executive of Associated British Foods, said: “The trial has ended and we are exploring our options, but as you can imagine, the margins are so small that it can be difficult to sell a £3 t-shirt when you’re spending the same amount just to ship it.
“The shipping costs for an online business it the key reason why online-only retailers can’t compete with us.”
He added that there are no plans for Primark to launch its own online business, suggesting customers prefer coming to stores.
Weston’s comments come as Primark saw sales jump an impressive 22 per cent to £4.27bn, with pre-tax profits up 44 per cent to £514m.
The rise suggests few customers took up the call to boycott Primark stores after the Rana Plaza factory collapse in Bangladesh left more than 1,000 garment workers dead, although Weston said the company had been at the forefront of supporting victims and their families, spending £2m on aid so far.
He also warned other retailers that they must stop using ethical policies as a way to gain sympathy from customers and actually change the way they work instead.
“If there is any good that comes out of Rana Plaza, it is a huge wake-up call that the sector has been long overdue.
“However, we must get away from the days of the past where companies parade their ethics as a marketing tool.”
The growth of Primark was mainly due to its European expansion with 19 stores opened this year and a further 20 planned for 2014. Sales were up 5 per cent on a like-for-like basis.
Primark’s success has been tempered by ABF’s other businesses, which have been hit by new EU regulations. Sugar revenues were flat at £2.67bn while pre-tax profits fell 15 per cent to £435m.
Overall, ABF sales were up 9 per cent to £13.3bn, with pre-tax profits up 13 per cent to £1.1bn.
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