Primark refuses to go online despite £1bn lockdown loss
Primark says it has no plans to sell its clothes online despite warning that lockdown store closures could cost it more than £1bn in lost sales. At the moment, 305 of Primark’s 389 global stores are closed – including all 190 of its UK stores.
But the retailer has no online operation to fall back on as it says the cost of setting one up would force it to raise its prices. The brand’s sales fell 30% to £2bn in the 16 weeks to 2 January.
It contrasts with online only fashion retailers such as Asos and Boohoo, whose sales rose by around 40% in the last four months of 2020. On Thursday, consumers called on Primark to embrace e-commerce with one tweeting: “Online sales are thru the roof during the pandemic. You’re missing out on a LOT of money.”
But the retailer tweeted back: “We prefer to sell our products in our physical stores but thanks for the suggestion.”
Since March last year, non-essential shops in the UK and overseas have faced strict curbs and prolonged closures and all are currently shut in England. In a statement, Primark said that if all of its stores stayed closed until 27 February 2021, it expected to miss out on £1.05bn of sales – up from a previous estimate of £650m.
The retailer said it would partially mitigate this by cutting its costs, but did not say if that would mean job losses. “On this basis, we expect the adjusted operating profit for Primark in the first half to be broadly break-even, which would compare to an adjusted operating profit of £441m for the same period in the last financial year,” it added.
In the past Primark has said it won’t sell online because the cost of manning such an operation and handling returns would mean it could no longer offer such low prices. But the impact of not being able to trade online in lockdown had been “laid bare”, said Richard Lim, of analysts Retail Economics.
“As the lights went out across their store estate, sales were effectively switched off too while the competition pivoted to online platforms,” he said. “The longer these disruptions continue, the larger the price they will have to pay.”
Associated British Foods also owns food and agriculture businesses. Sales across the group were down 13% in the 16 weeks to 2 January at £4.8bn.