Primark owner Associated British Foods said this morning that the discount clothing chain saw sales jump 18% in the 16 weeks to 3 January – further evidence that British shoppers are trading down in increasing numbers. After a week in which Primark’s been in the headlines for all the wrong reasons (after one of its suppliers was accused of dubious practices), these figures prove that it’s still doing what it does best: flogging huge piles of cheap clothes. And it’s all the more impressive given that famous high street names like Argos, Homebase and Currys have all reported dismal Christmas sales today…
One caveat to these Primark numbers: ABF refused to give any details on like-for-like sales, except to say that they were ‘very good’ – this is an overall sales figure, so new store openings will have had a substantial impact. Nonetheless, it’s clear that the popularity of Primark’s unique brand of cheap chic shows no sign of waning; indeed, ABF said Christmas trading was actually better than it expected. Its success – and that of fellow discount retailers Peacocks and Poundland – show that more and more of us are looking for bargains when we go shopping, which is presumably bad news for Primark’s higher-end rivals.
Indeed, Primark’s success is not exactly representative of the high street as a whole, as evidenced by today’s shocking results from DSG International and Home Retail Group. DSG, the owner of Currys and PC World, admitted that like-for-like sales were down 10% in the three months to January 10 – and it would have been a lot worse had it not been for a late post-Christmas rally (apparently people waited for the sales to pick up their new laptop or flat-screen). Meanwhile HRG said that sales at Argos and Homebase were down 7.5% and 10.2% respectively in the 18 weeks to January 3, as customers trimmed back their household spending. Ouch.
For retailers like these, the outlook for 2009 is looking pretty grim. ‘We expect 2009 to be challenging across most of our markets and are actively planning and managing the business,’ said DSG boss John Brewett today, as he announced plans to cut another £20m from the cost base. However, Primark seems to be ploughing ahead regardless: it’s just opened six new stores (taking its total to 187), including three in Spain and one in Holland as it looks to conquer Europe with its cheap and cheerful proposition.
So while its illustrious rivals struggle, Primark’s success helped ABF to boost group sales by 21% over the period. Now to start worrying about those (alleged) Mancunian sweatshops...
In today's bulletin:
Primark makes Currys and Argos look like no-marks
Russian ex-spy sniffing round Evening Standard
Small firms get £20bn - but what about the big boys?
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