Associated British Foods said budget-clothing retailer Primark, which trades as Penneys in Ireland, will test a UK click-and-collect service on children’s products, seeking to boost sales that are still recovering from the pandemic.
In a significant departure for a retailer that has previously resisted moving any of its sales online, the trial will take place in up to 25 stores in northwest England later this year and is expected to drive higher footfall and boost sales, the company said in a statement on Monday.
Primark was hit hard during lockdowns as stores closed and it lacked an online business to fall back on. Sales are recovering since stores reopened, but like-for-like they are still 9 per cent lower than pre-Covid levels three years ago, AB Foods said.
Shares in AB Foods rose 2 per cent in early trading in London.
“Primark has got the authority in children’s clothing,” chief financial officer John Bason said. “We’ve got a very strong following and we think the opportunity is very big here.”
Increased traffic
The move to consider expanding online follows the launch of Primark’s new website in April, which allows customers to check the availability of products in stores, but still doesn’t let them transact online. Traffic to the new site is up about 60 per cent compared with its previous version, which just showcased some of the ranges in store, and customers are viewing twice as many pages as before.
Primark warned in April that soaring inflation in Britain would lead to selective price increases of some of its autumn and winter clothing range as cost savings aren’t enough to offset the pressure of inflation. For now, it’s too early to say how consumers are reacting to the higher cost of living, but they are buying colourful dresses and luggage and holiday essentials at Primark, showing the return to socialising and holidays abroad, Bason said.
Primark is on track to deliver a full-year adjusted operating profit margin of about 10 per cent.
AB Foods, which also owns sugar, agriculture and ingredients divisions, said on Monday that the group overall was trading in line with expectations with the outlook unchanged. Sales grew 10 per cent in the food business in the third quarter, reflecting price increases to counter input cost inflation.
Speaking about the rise in petrol prices, Bason said higher energy costs affected AB Foods in terms of the cost to produce and distribute goods. The higher costs are reflected in price increases, he said.
