Primark set for expansion as Omicron fails to dent footfall despite European closures

Speaking at parent company Associated British Food’s (ABF) AGM, chair Michael McLintock said Primark had seen improved like-for-like sales in this quarter compared to last year with trading “ahead of expectations.” In further comments to Reuters he added: “In terms of the Omicron variant we haven’t really seen much of an effect on footfall. We’re trading well over Christmas.” Primark relies entirely on in-store purchases and does not sell online increasing its vulnerability to Covid restrictions.

Following new advice to work from home this week the British Retail Consortium warned there could be “significant impacts on footfall for some retailers who have only just begun to find their feet after the pandemic.”

The store has faced pressures in Europe with restricted trading hours in the Netherlands and vaccine passes required in Germany.

In a major blow five of its stores were closed in Austria.

Despite this, though it is keeping its eye firmly on expansion with two new stores in Spain and Italy opened in recent months.

It has previously said it plans to open 11 new stores next year across Italy, Spain and the US.

Reporting today a milestone of 400 stores it aims to reach 530 over the next five years.

Mr McLintock was confident the company would resist pressures faced widely in many sectors from supply chain issues, saying: “We are managing disruption in our supply chain by prioritising products most in demand with the support of our logistics providers for whom we are a very important customer.

“We have stock cover on the vast majority of lines for the important Christmas trading period.”

At a time many FTSE companies have struggled ABF’s share price has crept up this morning with Primark’s success a key factor.

Investment Director at AJ Bell Russ Mould commented: “Against a difficult backdrop, Associated British Foods looks to be doing its best to deal with supply and cost inflation issues.

“Perhaps most important to its share price is the progress with Primark, where margins are better than expected and it seems confident on having enough stock for the important festive season.

“But there remains a risk with tightening Covid measures which means that recent Primark success is perhaps not enough to trigger any upgrades to earnings forecasts.”

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Across the rest of ABF the picture is less positive with Mr McLintock admitting port congestion and freight limitations had been problems.

He also explained the firm has seen increased costs for energy and logistics, warning that there may be price increases “where necessary.”

Popular brands owned by the company include Ryvita, Kingsmill and Twinnings.

Whilst some food brands may see increases, ABF has so far resisted any price hikes in Primark with ABF CEO George Weston saying last month: “We haven’t increased prices at Primark over the past 10 years and we won’t do so this year.”

source: express.co.uk