Store closures weigh down Primark sales

Primark‘s turnover has been hit hard over the last few months, as stores in several countries were forced to remain closed and fears of the Omicron-variant of the coronavirus made shoppers less keen on visiting physical stores. The Irish fashion discounter will therefore cut hundreds of British jobs.

Lockdown

In the sixteen weeks preceding 8 January, Primark reported sales of 2.7 billion pounds (3.2 billion euros), almost a third higher than the same period last year. However, this seemingly strong result is mainly because of the favourable basis of comparison: at the end of last year, many more countries suffered from store closures. Primark estimates the damage from the store closures in the Netherlands and Austria to amount to 36 million euros in total, Dutch website Nieuws.nl reports.

Moreover, in countries where the stores remained open, fewer people visited due to fear of the Omicron-variant. Compared to the same period two years ago – before the Covid crisis – revenue fell by more than 10 %.

However, sales have again improved considerably in recent weeks, especially in the United Kingdom. As fears surrounding the Omicron-variant eased, more shoppers found their way back to the stores. In other European countries, this will probably take a little longer, John Bason thinks. The CFO of Primark owner AB Foods makes this estimation as many other countries are not quite at peak Omicron yet.

Restructuring

The group said its supply chain problems had subsided since last autumn, although there have still been some delays at ports and with shipments. Primark will not raise its prices despite cost increases, but will cut operating costs and overheads.

Primark plans to restructure its retail management team in the UK. This would result in a net loss of 400 jobs, reports Enfield Independent. According to the chain, the simplified management structure would provide more opportunities for career progression and greater flexibility.