Primark Sales Surge on Fashion Chain's Low Prices and Flamingos

  • Growth provides bright spot in struggling U.K. clothing market
  • Shares in owner AB Foods rise 6.2% as sales growth accelerates

A customer holds bags after shopping at a Primark clothing store, in London.

Photographer: Luke MacGregor/Bloomberg

The Primark budget fashion chain provided a bright spot in an otherwise struggling U.K. clothing industry, reporting a surge in sales as its low prices and a hot new trend helped draw hard-pressed consumers.

Primark’s U.K. same-store sales growth in the third quarter was considerably higher than a 2 percent rise in the first half, John Bason, chief financial officer of owner Associated British Foods Plc, said in an interview Thursday. Among the most popular lines were 10-pound ($13) inflatable flamingos as the retailer capitalized on one of the summer’s biggest crazes that has seen the pink birds emblazoned on everything from cushions to clocks.

A Primark pink flamingo

Source: Primark

“The U.K. in particular is showing very, very strong trading at the moment,” Bason said of Primark’s performance. “Against a background of what a lot of retailers have been reporting, I think we are a standout.”

The sales provide a contrast with the likes of Next Plc and Marks & Spencer Group Plc, whose clothing sales are stuttering as cash-strapped households look to the likes of Primark to make their money go further. It’s a similar story outside of fashion as discount grocers Aldi and Lidl continue to boost their share of food spending, while general-merchandise merchant B&M European Value Retail SA has also reported resurgent growth.

“The U.K. economy has gotten consistently more people into a job, but at a lower average real wage,” UBS analyst Andy Hughes said by phone. “That means people are seeking out more value wherever it might be.”

Primark’s sales gave a boost to shares of AB Foods, which rose as much as 6.2 percent in London, the biggest gain in eight months.

At constant currency rates, Primark’s sales advanced 13 percent in the first 40 weeks of the financial year, beating analyst estimates. 

The chain has been able to secure more favorable purchasing rates with suppliers and mitigate pressure from the weakness of sterling more fully than it had expected, Bason said.

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