Primark expects to rake in £2billion worth of sales by the end of the year since reopening its stores in June.
The cheap fashion group, which does not operate an online shop, beat its sales expectations in the last quarter amid ‘reassuring and encouraging’ signs that shoppers still have an appetite for inexpensive fast fashion.
Primark’s owner, Associated British Foods, said it now expects the fashion chain’s operating profits to be ‘at least at the top end’ of its previous forecasts of £300million to £350million. Last year, the figure was over £900million.
Booming: Primark expects to rake in £2billion worth of sales by the end of the year
Primark’s sales have been driven by larger customer baskets with transaction sizes initially ‘significantly higher’ than last year due to ‘pent-up demand.’
The company said sales at stores in retail parks have been higher than last year, while shopping centre and regional high street stores were broadly in line with their average.
But, the company’s biggest stores in major shopping destinations, including London’s Oxford Street, have been hit by a significant slump in footfall amid lower numbers of tourists.
ABF said: ‘By store the performance has varied, reflecting the current circumstances of our customers including increased home working, less commuting and much less tourism.’
It added: ‘In the UK sales since reopening are expected to be 12% lower on a like-for-like basis and if the four large UK destination city centre stores are excluded the decline is 5%.’
The retailer shut down all its UK stores when lockdown was introduced on 23 March and initially saw sales shrink from £650million a month to zero as it has no online business to fall back on.
Buying more: Primark’s sales have been driven by larger customer baskets with transaction sizes initially ‘significantly higher’
Safe shopping: Since reopening, Primark has It is also introduced all the new regular post-Covid features
Popular: Queues of shoppers waiting to get into a Primark store earlier this year
Since reopening, Primark has It is also introduced all the new regular post-Covid features, including hand sanitiser stations, perspex screens at tills and additional cleaning of ‘high frequency touch points’, with staff working wearing masks and gloves.
Changing rooms remain closed, meaning many customers may be purchasing the same product in different sizes so they can try them all on at home.
Primark had made it clear before its stores reopened on 15 June that it would not be marking down stock to flog at a discount in its shops.
Earlier-than-expected reopening of stores means the fashion chain now expects to book a £150million hit from unsold inventory, having previously predicted it would face a £284million exceptional charge.
ABF said Primark’s global store opening plans had been ‘delayed’ this year by ‘restrictions on access’ for store fit-outs. It plans to open one new store in the UK next year.
Looking ahead to the Brexit transition, ABF said: ‘Our businesses have completed all practical preparations should the UK exit the Brexit transition period with or without a trade deal.
‘Primark operates largely discrete supply chains for its stores in each of the UK, US and Europe and the group’s food production is largely aligned with the end market.
‘As a result there is relatively little group cross-border trading between the UK and the EU. Contingency plans are in place should some of our businesses experience disruption.’
ABF said trading in its food divisions had also been better than predicted so far in the fourth quarter.
The group said it expects a ‘very strong’ increase in the aggregate adjusted operating profit for its sugar, grocery, agriculture and ingredients businesses over the last year.
Grocery sales were boosted by a continued jump in retail volumes in its key markets of the US, Europe and Australia.
ABF said this was particularly driven by growth in the UK grocery arm and Twinings tea business, although it said revenues were held back by lower sales for Ovaltine and Allied Bakeries arm, which makes Kingsmill bread.
A jump in demand for store-cupboard ingredients following the pandemic benefited its Silver Spoon, Jordans, Dorset Cereals, Ryvita and AB World Foods arms in the second half.
Shares in ABF are up 1.13 per cent or 23.00p to 2,050 at present. A year ago the company’s share price stood at around the 2,305p mark.