Primark’s owners said the UK high street was “not remotely dead” as the cut-price fashion chain revealed sales growth and plans for new stores despite troubles at many of its rivals.
The retailer, which does not sell online and so misses the big consumer switch towards buying from laptops, tablets and phones, nevertheless said sales rose 3% at established UK stores in the six months to 3 March.
Strong growth of denim, puffa jackets and slogan tops powered growth in the UK despite the snow and cold weather caused by the so-called “beast from the east” in late February and unseasonably warm October when sales fell back strongly.
John Bason, the finance director of Primark’s parent company, Associated British Foods (ABF), said: “We are trading extremely well. For all people say about footfall on the high street we wouldn’t be getting these numbers if more people weren’t coming into our stores.”
He added: “The UK high street is not remotely dead. Online is growing but we are growing too.”
The state of UK retail’s ill-health
Retailers that have gone bust 2017-18
Toys R Us: 180 stores employing 3,000 staff, collapsed 28 February. Owes £15m in VAT, due by 1 March.
Maplin: 200 electronics and gadget stores, founded 1972, also failed on 28 February.
Warren Evans: bedmaker went into administration earlier in February.
East: fashion brand with nearly 50 outlets folded in January.
Juice Corp: business behind brands including Elizabeth Emanuel and Joe Bloggs went under in January.
Multiyork: furniture chain with 50 stores went into administration in November.
Feather & Black: bedroom furniture and bedding specialist with 25 outlets collapsed in November.
Retailers under pressure
New Look has debts of more than £1bn and has lost some of its credit insurance cover, which protects suppliers if a retailer goes bust. In the 10 months to Christmas, sales fell 11% and losses hit £123m. The company intends to close 60 stores and change its fashion ranges, but faces a struggle to win back young shoppers.
House of Fraser’s Chinese owner, Sanpower, had to stump up £25m to see the store through Christmas and its debt is rated as junk. The retailer is attempting to reduce the size of its stores by 30% and has asked landlords to cut rents.
Debenhams, a 178-store chain that is more than 200 years old, is axing one in four of its managers and considering closures to cut costs. It has warned that profits have been hit by lower than expected sales, with profit margins also down as a result of having to cut prices to match rivals.
Photograph: Tony Margiocchi / Barcroft Images/Barcroft Media
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The retailer opened two UK new stores, in Charlton, south-east London, and Staines in Surrey, and plans to open two more, in Burnley and at Westfield’s west London mall, in the next six months. It is also opening stores in Germany, France, Spain and the US, where it will move into Florida late next year. It said the fledgling US chain had “made progress”.
Primark is increasing market share in the UK despite troubles at rivals including New Look, H&M and Mothercare. New Look is closing up to 60 stores as part of a rescue restructure while Mothercare is thought to be considering a similar move that may involve the closure of almost half of its 152 UK stores. H&M was left with a backlog of clothing after weak sales blamed on the cold weather.
Retailers are struggling with a switch to online shopping and low consumer confidence. Last month, shopper numbers slumped 6%, the steepest drop since the end of 2010, as dismal weather kept them at home.
Shares in ABF were up nearly 4% , although analysts were disappointed by an overall 1.5% fall in underlying sales at Primark in the half year, as sales at established outlets in northern Europe were affected by unseasonable weather and the opening of additional Primark stores nearby.
Sports fashion and outdoorwear group JD Sports also rose above the retail gloom as it reported a 33% rise in sales to £3.1bn and 24% rise in pretax profits to £294.5m.
The retailer, which is benefiting from the “athleisure” trend and a shift towards more casual footwear in everyday life, said sales at its established stores across Europe rose 3% while sales of sportswear online jumped more than 30%.
JD Sports shares were up nearly 5%, the biggest riser on the FTSE 250.