Home Entrepreneur Primark returns to the game after Covid's shock

Primark returns to the game after Covid’s shock

April 20, 2021

4 minutes of reading

This story originally appeared on ValueWalk

“Primark was lost in the forest retail in time pandemic, stuck by repeated Covid closings. Without an online crutch to rely on, it’s a harsh environment during lock-in time with £ 1.1 billion in sales. Even when the stores were open, the social detachment meant similar sales were 15% lower.

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Primark is back in the game

When Primark struggled, ABF’s food business prospered, with operating profit up 30%, with demand for ingredients fueled by waves. closing order bake. Even so, ABF still saw six-month adjusted operating profit down £ 369 million, down 46% year-on-year.

But as the restrictions on the social gap eased and non-essential stores reopened, Primark is back in the game, with stores in England and Wales hitting record sales for the first week. payment for the first 12 daysorder April.

The python is once again stalking its giant stores, as loyal customers line up to buy the styles they have spread on social media in recent weeks. here.

It is a repeat of the release of pent-up demand seen after the easing of restrictions during key 1 and 2 and why Primark is so bullish despite the loss in revenue due to closing. door. Demand for ‘at home’ styles like sunglasses and nightwear is particularly strong. Even so, securing the latest fashions to welcome shoppers after the latest lockdown has come at a cost. The inventory fee associated with the fall and winter clears to make way for the new styles totals £ 21 million. However, with less red stickers needed compared to the same period last year, Primark’s talent for buying and managing inventory must be admired.

Strong social media presence

Primark’s strong social media presence is key to its success in attracting shoppers back, with 8.7 million followers on Instagram alone. For now, it looks like this panther won’t change its stance when it comes to its online strategy, with no plans to open a digital store. Instead, it sees internationalization expansion is key to its growth prospects, with success in new markets such as Florida and Poland. 9 more stores will be opened in the second half of the year and in the future, the group sees great potential in the US market in particular.

However, the demands of social exclusion in stores and the continued closure of stores in some markets are still likely to be drags on sales. The continued shutdown of international travel and office space could hurt sales at major downtown stores, depending on tourist spending and workers’ lunch times. moving. In contrast, similar sales at retail parks were higher than a year ago, and that trend is likely to continue.

The team assumes that although profits will be lower this year, they expect Primark to return to cash-generating, so it is paying back. take leave Plan money is accumulated during the first six months. It also expects strong end of its performance in the grocery, sugar and raw agriculture sectors.

But after halting dividends last year when Covid held all over the world, the dividend returned, showing general optimism of the group. The board has declared an interim dividend of 6.2 pence per share for a total of £ 49 million. “

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