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Primark sales down after challenging Christmas for UK retail | Business

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Sales at Primark’s UK stores went backwards at Christmas in a further sign of the toll taken on fashion retailers by grim market conditions over the traditionally lucrative trading period.

The no-frills fashion chain suffered a “marginal” decline in underlying sales and said it would only open one store in the UK this year – the lowest number in decades – as it turns its financial firepower overseas to find growth.

The Primark update came as high-street suits specialist Moss Bros said it would make a loss of £1m in the current financial year. The chief executive, Brian Brick, said “intensive discounting” by rivals and a big dip in shopper numbers on the high street were behind a 3.2% drop in like-for-like sales in the 24 weeks to 11 January.

The plus-sized online specialist N Brown, which owns Simply Be and JD Williams, also blamed wall-to-wall discounting in December alongside problems in its finance arm for a profit warning that knocked nearly 25% off its shares. Its sales finished 5% down in the 18 weeks to 4 January with the poor performance shaving £10m off pre-tax profits which are expected to come in at £71m.

Many retailers, including big high-street names such as John Lewis and Marks & Spencer, struggled to get shoppers to part with their cash in 2019 as political instability and worries over Brexit weighed on consumer confidence. Many retailers resorted to price cuts and last week Steve Rowe, the chief executive of M&S, complained of “unprecedented discounting” between Black Friday and Christmas.

Analysts said Primark fared better than other UK clothing chains, with sales at established UK stores down by about 0.5% compared to a drop of as much as 2% across the market in the 16 weeks to 4 January. John Bason, the finance director at Primark’s owner, Associated British Foods, said the retailer had won business from rivals with its low prices.

However, he admitted the whole fashion market was under pressure as Britons chose to spend their spare cash on other things.

“Consumers are given a much bigger choice of things to spend their money on. [Fashion] is weighed up against that,” said Bason. “Most people prioritise a subscription to Netflix or a new iPhone.”

With shoppers spending their money carefully, the cut-price books, crafts and toys chain The Works, which issued a huge profit warning in November, said it was putting the brakes on new openings and replacing its long-serving chief executive, Kevin Keaney, with its finance chief, Gavin Peck.

After a tumultuous 2019, sales at The Works – which only floated in 2018 – actually returned to growth over Christmas, with sales at established stores up 1.5%. That gave a boost to the company’s beleaguered shares, which have lost 75% of their value in the past 12 months, reducing the company’s worth to just £22m.

Against this difficult backdrop, Primark said its sole UK opening in 2020 would be in the Trafford Centre in Manchester, where it will move into the former BHS site. Bason said it was unlikely to be snapping up the numerous empty Debenhams, House of Frasers or Beales outlets, as it now had 7.5m sq ft of space across the UK.

“We are already very well represented and you have got to have discipline on how much space you do have,” continued Bason. “Just because they are there doesn’t mean you buy it.”

Instead, Primark is focusing on overseas expansion with new sites in the US, France, Italy, Spain and a move into Eastern Europe. Two stores are set to open in Poland along with the company’s first outlets in Prague in the Czech Republic.



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