Primark credits ‘pent-up demand’ for post-lockdown sales boost

The owner of Primark has reported a “pent-up demand” boost for sales since the coronavirus lockdown ended.

Associated British Foods (ABF) said in a trading update on Monday that the discount fashion chain’s stores saw an initial rush of shoppers when they restarted trading in June.

It reported that basket sizes were “significantly higher” than in the same period last year, though the spending spree tailed off towards the end of its financial year to 12 September.

Primark is unusual in that it has no online trading platform, meaning it was forced to completely shut down when the nationwide COVID-19 lockdown began in March.

It has since distanced itself from any suggestion that it is to relent and launch a digital sales channel at a time when the wider retail sector is shedding thousands of store-based jobs.

The statement said: “Since reopening we have traded strongly, attracting customers with our value-for-money offering and a welcoming and safe store environment.

“Cumulative sales since reopening to the year-end are expected to be £2bn and our adjusted operating profit… is now expected to be at least at the top end of the previously advised £300-350m range.”

ABF shares rose 3% in early trading in reaction to the pre-close trading statement, which also showed that the wider business was also trading ahead of expectations.

The company said it expected to report a “very strong” increase in adjusted operating profits for its sugar, grocery, agriculture and ingredients arms in its full-year results in November.

In Primark’s case, it said UK retail park outlets had performed particularly well, with its four largest city centre stores proving the weak links – reflecting the continuing exodus of office workers and a lack of tourists.

But it conceded UK sales since reopening were expected to be 12% lower on a like-for-like basis compared to the same period last year.

It said when sales at the four UK city centre destinations were excluded, the decline would be nearer 5%.

Analysts at Jefferies Equity Reserch said of the performance: “As expected Primark’s relevance has remained strong post retail unlocks across Europe, despite an accelerated shift of apparel consumption to online.

“This sets the scene for 2020-21 as a year of strong recovery, with a challenged consumer playing into Primark’s strengths and a restructured high street leading to stepped up share gains in the physical market.”

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