Discount Textile Retail Chain Primark has shrugged off the gloom on the UK’s high streets after reporting better-than-expected sales since lockdown restrictions were eased in mid-June. The discount clothing retailer's owner, Associated British Foods (ABF), said the number of people visiting its stores had risen and shoppers were spending “significantly” more than last year. Revenues were “reassuring and encouraging”, ABF said on Monday.
Primark's full-year profits are expected to come in at the top end of forecasts, between US$384m - US$450m (£300m - £350m), ABF said.
While that is down on US$ 1.2bn (£913m) last year, Primark has outperformed many of its competitors, who have struggled to revive sales since the pandemic began.
Primark’s like-for-like sales in the UK since reopening are expected to be 12 per cent lower than the same period last year, partly due to weaker performance at its four largest stores.
The company cut its expected hit from unsold stock to US$192m (£150m) from the US$364m (£284m) it had forecast earlier in the year, after stores were allowed to open earlier than expected.
Primark's revival has come despite the fact that it went into the pandemic with no online sales operation, indicating that shoppers can be tempted back to the high street for the right price. The company reported in May that sales had dropped from US$832m (£650m) a month to zero after closing all of its stores across Europe and the US.
ABF, which owns a range of brands including Twinings tea and Kingsmill, said trading in its food divisions has also been better than predicted so far in the fourth quarter, as the company provided a pre-close trading update for the financial year to 12 September.
The group may have been boosted by a trend that has seen more people baking since lockdown began. Increased demand for yeast and bakery ingredients helped ABF's ingredients arm, and profits from sugar sales are expected to increase this year.
In a statement, ABF said: “Since reopening Primark stores, we have seen increasing numbers of transactions driven by footfall.
“The average basket size was initially significantly higher than last year, reflecting some pent-up demand, and while this outperformance has reduced in recent weeks, it remains higher than a year ago. “We have continued our policy of offering the best prices, and markdowns for the period since reopening have been low.”