Following today’s release of Primark figures for H1 FY2020/21; Pippa Stephens, retail analyst at GlobalData, a leading data and analytics company, comments: “With only 22% of Primark’s retail space currently open as a result of COVID-19 measures across most of its markets, its revenue has plummeted, estimated to have fallen by £1.5bn to £2.2bn during H1 FY2020/21.
“As the retailer continues to resist introducing a transactional website to its operations, despite consumers’ rapid shift to purchasing fashion online during the pandemic, its strong presence in international markets outside of the UK has provided a lifeline during these trying times. Stores in several of its EU markets are still trading, albeit with some reduced opening hours, while performance in the US has also been promising, aiding its adjusted operating profit to reach slightly above break-even for the period.
“As well as the gradual reopening of its remaining estate during the next couple of months, Primark also still plans to add nine more stores to its portfolio in H2, following the six that opened in H1. The retailer has reported high demand in markets where stores have reopened, with sales ahead of last year on a like-for-like basis in some countries, boding well for these new store openings since the rollout of the vaccine will only see things improve even further going forward.
“Following the UK government’s recent announcement outlining the country’s roadmap out of COVID-19, retailers are now able to make more informed decisions about their future ranges.
“While Primark reported strong sales for nightwear and loungewear in H1, demand in the second half is likely to experience a rapid shift towards more trend-led products, such as day dresses and blouses, as the opening of UK retail synchronises with outdoor hospitality, with hope instilled for a return to normality as quickly as June. Therefore, though it will have already placed orders for its upcoming spring/summer lines, it must now review these ranges in depth to ensure that they will still meet the ever-changing demands of its customers.
“Moreover, having been left with £150m worth of spring/summer and £260m of autumn/winter stock from last year, it must resist applying heavy discounts to help protect its margins, and instead carefully time the release of different products depending on the phasing of the pandemic to maximise sales.”