Primark has reported “stellar” clothing sales as the warm weather encouraged shoppers to snap up its low-cost summer fashions.
Last year investors were worried the stock market darling was running out of steam after sales at UK stores open more than one year turned negative for the first time.
But John Bason, finance director at Primark’s parent company, AB Foods, said the fashion chain had returned to form over the past three months. He said the retailer’s success was helped by the recent good weather and its “value” fashion appealing to increasingly hard-up Britons as inflation bites.
“Trading in the third quarter was very strong indeed,” said Bason, although he pointed out that the numbers were flattered by poor figures from a year ago when “unpredictable weather patterns” dented sales. “We had easy comparatives … but I don’t think our stores or merchandise have ever looked better.”
Credit Suisse analyst Charlie Mills estimated that like-for-like sales in the UK had risen 6% in the third quarter. “Primark looks to have had a stellar third quarter,” he said. “This is partly due to a soft comparative, but also very strong footfall and transactions leading to record market share gains.”
Bason said in recent months the number of shoppers visiting its stores had increased and that when they got to the till they were buying more items.
That is in sharp contrast with larger rivals Next and Marks & Spencer, which are battling falling clothing sales as Britons spend less cash on wardrobe updates and when they do look to trade down to cheaper stores.
“We’ve got the best clothing prices on the high street and are selling it at full price because we have got what people want,” said Bason. The industry data showed the return of inflation was having an impact on disposable incomes, he said, adding: “I think we are seeing the start of some tougher times for UK consumers.”
Shoppers, however, were keen on Primark’s inexpensive take on catwalk trends, with the retailer reporting strong sales of embroidered tops and ripped jeans. There was also huge demand for novelty items such as inflatable flamingos and unicorns as Britons basked in paddling pools or packed them to take on holiday.
Primark, Britain’s third largest clothing retailer by sales value behind M&S and Next, gained market share in the 40 weeks to 24 June. Total UK sales rose 9% thanks to a store opening spree that included Llandudno and Uxbridge.
Primark said group sales were up 15% at constant currencies in the third quarter. The retailer has successfully established a chain in Spain and has launched a global push, opening shops in Staten Island and New York in the US as well as Florence in Italy.
The retailer had previously warned investors that its profit margins would face greater pressure in the second half of the year, but Bason said they would now be no lower than in the first half after it struck improved deals with its suppliers.
Primark shares closed up more than 2% on Thursday, making it the second biggest riser in the FTSE 100.
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