Primark’s lack of transactional website is its main obstacle to recovery, says GlobalData

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Following today’s release of Primark’s preliminary figures for FY2020/21; Louise Deglise-Favre, associate retail Analyst at GlobalData, a leading data and analytics company, offers her view: “FY2020/21 has been another difficult year for Primark, with total sales estimated to be down 28% against FY2018/19 (£5.6bn versus £7.8bn), due in part to a poor Q4 where like-for-like (l-f-l) sales are expected to have been 17% lower than FY2018/19. The retailer has blamed the UK’s “pingdemic” for its disappointing results over the summer as it suppressed high street footfall, on which Primark remains critically dependent as it does not have a transactional website. This is a factor that has hugely cost the retailer this year, with the online penetration for clothing & footwear forecast to remain high at 47.7% in 2021. In the next financial year, Primark is planning to launch a revamped, yet still non-transactional website and expand its digital marketing – a strategy at odds with the changing consumer habits of online purchasing accelerated by the pandemic. Its lack of transactional website could remain a major hinderance to Primark’s performance.

“The Continental European market, especially Spain and Portugal, suffered from fewer tourists due to COVID-19 travel restrictions and curfews, with l-f-l sales for these markets declining by over 30% in Q4 compared to the same period in FY2018/19. In contrast, the US achieved a 3% growth of l-f-l sales in Q4 (excluding the Boston Downtown Crossing store, which has been downsized) against FY2018/19, thanks to quicker return to normality in the region. This bodes well for Primark’s performance in FY2021/22, barring any further restrictions, as it shows the sales growth the retailer could achieve in Europe as the region continues to return to normality and consumer confidence rises.

“On a more positive note, Primark forecasts its operating profit, stated before repayment of job retention scheme monies, to be ahead of last year. However, supply chain issues set to impact its inventory at the end of 2021 could cause availability issues for its Christmas range, potentially detrimental to next year’s operating profit. Primark’s value proposition remains attractive to consumers, especially as many will still feel financially uncertain, as it experienced good sales in its athleisure, loungewear and back to school ranges, demonstrating the resilient demand for a wide range of affordable fashion that should allow Primark to start to recover from COVID-19 in FY2021/22.”