John Bason, ABF finance boss, said that the huge demand for its ornithological-inspired inflatables was one of the suprise big-sellers which helped the high street retailer smash its sales predictions for the summer and avoid heavy discounting, reports The Telegraph. The trend for over the top swimming accessories has been driven by celebrities such as […]
John Bason, ABF finance boss, said that the huge demand for its ornithological-inspired inflatables was one of the suprise big-sellers which helped the high street retailer smash its sales predictions for the summer and avoid heavy discounting, reports The Telegraph.
The trend for over the top swimming accessories has been driven by celebrities such as Taylor Swift and Kourtney Kardashian and fuelled by social media posers. During the summer Primark was selling £9 flamingo inflatables as well as blow-up unicorns and £1 doughtnut-shaped floating cupholders.
ABF now expects sales for the full year to be 13pc ahead of the £13.4bn it made last year on a constant currency basis. Primark’s UK stores have also fuelled growth with sales 10pc higher than last year which has boosted its clothing market share even higher.
Mr Bason said that Primark’s new autumn collections were already selling well with its new Harry Potter clothing line also driving shoppers into the stores.
Unlike the vast majority of its rivals, Primark still does not have a transactional website meaning that shoppers who want to buy its cut-price clothes have to visit its vast stores. Primark added 1.5m sq ft of selling new space during the year, with 30 new shops across nine countries, including 11 in the UK.
Analysts at GlobalData said that Primark is now just 0.5 points off becoming the second-largest player in the UK clothing market behind Marks & Spencer as it looks set to leapfrog Next, which has suffered from dismal sales this year.
“Primark’s value credentials, broadened offer and improved store experience have allowed it to acquire new customers who are frustrated with stale ranges and dated stores across the likes of M&S, Arcadia and Debenhams – or whose budgets are squeezed and are satisfied with the product quality and choice at Primark,” said Honor Strachan, principal retail analyst at Global Data.
Mr Bason said that Primark was outperforming its retail rivals because “we’re on-trend, we have a great price, we have basics and we have fun”.
Primark has also committed to keeping its shop prices low, despite a jump in import costs as a result of the weaker pound which has prompted many of its high street peers to raise prices by as much as 5pc. “We have stood by our UK consumers, even if it means lower profit and lower margins at Primark,” said Mr Bason.
While a weaker pound has made importing costs more expensive, Associated British Foods is largely cushioned from the sterling slump because two-thirds of profits are generated from its vast international business. Primark has shops across 11 countries while its British Sugar division is also boosted by a weaker pound.
“A stronger dollar against the pound is hitting margins because it means higher input costs, but a stronger euro has a positive transaction effect from its eurozone stores,” said Neil Wilson at ETX Capital.
ABF expects a £85m foreign exchange benefit from the weaker pound, although Mr Bason said that with the currency stabilising no translation benefits are expected next year.
Despite the upbeat trading outlook, ABF shares were trading 94.5p, or 2.8pc lower at £31.77 in midday trading after gaining 15.5pc in the year to date.
Bank of England governor Mark Carney has reiterated his expectation that the bank will raise interest rates soon.
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Theresa May has threatened a trade war with the US after it slapped punitive tariffs on British-built aircraft, casting doubt on a key plank of her Brexit strategy.
