Irish fashion discounter Primark does not think the coronavirus will affect its short-time results, confirming its H1 turnover forecast as a 4.2 % growth. The long-term story, however, may be different.
Sufficient stock
In a trading update, Primark says it usually increases its stock before the Chinese New Year, meaning the retailer currently has sufficient stock for the next few months and says there is no problem in the short run. However, the company added that, should production delays continue for a longer while, certain lines may show shortages later on in the year. In that case, raising production at suppliers in other regions is a possibility Primark will consider.
In the first half of the current financial year, the retailer expects a 4.2 % turnover growth excluding (and 2.5 % including) exchange rate fluctuations. British sales went up 3 % as more stores opened, but comparable sales went down: strong performances in November and December were offset by weaker sales in the first two months of 2020. Sales in the Eurozone would be 5.3 % higher than a year earlier, as Belgian, French and Italian turnover blossomed and German sales showed signs of improvement. A lower margin will push profits down by a small fraction.
