Primark survives hard winter for UK high street as sales rise over Christmas

Sales were boosted due to increased selling space from new stores or branch relocations

Caitlin Morrison
Thursday 17 January 2019 10:34
Death of the UK high street: Retailers gone since 2008

Discount retailer Primark bucked the trend of gloom on the high street over Christmas, reporting a 4 per cent rise in sales in the 16 weeks to 5 January.

The sales growth was due to increased selling space – the company opened four new stores around the globe last year, and also moved some branches to larger premises.

This added space helped offset a decline in like-for-like sales, the company said.

Analysts said that while Primark had reported strong numbers in its latest update, trading is likely to become more difficult in future.

“Primark has one of the most compelling propositions on the UK high street. However being a non-discounting store-only retailer poses a challenge in the runup to Christmas as spend continues to shift online and the market becomes even more promotional allowing shoppers to more easily trade up,” said Kate Ormrod, retail analyst at GlobalData.

“Targeting competitive segments of the market, specifically the 16-24s, will only prove more difficult for Primark due to the fierce opposition, namely from online pureplays given their ability to better engage shoppers online.”

However, Sophie Lund-Yates at Hargreaves Lansdown said that Primark deserved praise for “managing to shine through a pretty muddy high street environment”.

“With brands from Debenhams to Superdry battling with a dwindling customer base, Primark’s doing well to stand firm – especially because it doesn’t have an online presence to rely on like the others,” she said.

“For now Primark just needs to keep doing what it’s doing – opening new stores is clearly working, even if doing so seems like a brave move in a rocky retail climate. All in all, Primark’s in a position some of its rivals can only dream of.”

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Primark’s parent company, Associated British Foods, said total revenue for the period was 1 per cent ahead compared with the same period one year prior.

The strong performance in retail bolstered the group against another decline in its sugar business, where revenue was down 14 per cent.

“As expected, the lower revenue in our UK and Spanish businesses in the period was the result of the lower EU sugar prices for contracts negotiated at the end of last financial year. Looking ahead, the development of our sales book for this year has indicated early signs of recovery in EU sugar prices,” the company said.

Shares in ABF were up more than 5 per cent in early trading.

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