There are a few factors underpinning the brightening outlook for Associated British Foods-owned Primark.
At a time when people are really watching their pennies, its low-cost clothing is attractive. Particularly for those jetting off on holiday and facing a big cost to do so, who therefore want to refresh their summer outfits on a budget.
AJ Bell’s Russ Mould said: “The recovery of physical retail has also provided a big boost to a brand which only has a very limited web-based presence. It should not come as any surprise that when it comes to clothes, shopping in-store is a winner.
“After all, picking up an item, getting a proper sense of its look and feel and then trying it on in an actual changing room seems preferable to looking at an item on a screen, ordering it off the internet and then having to go to the faff of returning it by post or courier if it doesn’t fit right or look the same on you as it does on the internet model.
“The company is also pushing through some price increases and it’s encouraging Primark has the headroom to do so without damaging its value credentials. Particularly when, on a relative basis, it still looks cheaper than high street rivals.
“Longer term there remain questions about the sustainability of Primark’s supply chain and its somewhat disposable clothing options.
“Often neglected in the analysis of the wider group is the food business, which offers some diversification. This part of the business continues to perform well and the company continues to invest for future growth.”
Leave a Comment