Primark struggles with rising costs, plans 100 new stores
Primark has revealed the difficulty in recovering from the pandemic as it says it is struggling with higher costs and supply chain issues.
Nationwide lockdowns saw Primark’s yearly sales slump 12% on pre-Covid levels due to store closures. The company lost £2 billion in sales last year as a result.
Primark lost one-third of its trading days in the 53 weeks to 18 September, but with big expansion plans and a return to normal, the new financial year is expected to see higher profits.
Primark is set to see more stores built over the next five years with more stores opening in the US, France, Italy and Spain. There are currently 398 stores in total and it is expected to grow to 530.
Whilst the pandemic saw stores close, Primark has seen some advantages. The retailer’s autumn and winter range is cashing in on the continued trend for “comfort living” and loungewear – a trend that boomed over the pandemic.
It’s a rarity for High Street retailers to not have an online retail store, and whilst the company plans to revamp the website next year, shoppers will still not be able to order products online.
The company said the website would show products which customers can “browse online, before they come into our stores”
*adds all to Primark shopping list* 👏 pic.twitter.com/kOv66scAbw
— Primark (@Primark) November 1, 2021
Primark supply chain issues
Primark’s parent firm, AB Foods said its adjusted pre-tax profits had fallen by 1% to £908m for the year, with the dip in sales at Primark offset by “strong” sales in its food business.
The firm’s chairman, Michael McLintock, said sales and profit were again below pre-Covid levels, but praised the “agility” of Primark’s management in responding to “the fast-changing and wide range of trading restrictions applied to our stores over the year”.
“The strength of Primark’s sales after the reopening of all our stores in the spring demonstrated the relevance and appeal of our value-for-money offering,” he added.
Mr McLintock said AB Foods was seeing “significant cost increases in energy, logistics and commodities, in addition to the impact of widely reported port congestion and road freight limitations”.
“Primark is not immune to the challenges of supply chain, raw material cost and labour rate inflation,” he said.
“Our businesses are working to offset the impact of these through cost savings. Where necessary, our food businesses will also implement price increases,” he added.
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