Primark is on track to overtake Next as the UK’s second biggest clothing retailer this year after strong sales over the winter.
Low prices, aviator jackets, children’s clothing and new makeup ranges helped Primark outperform rivals – even though it does not sell online, the source of most sales growth in the sector.
Sales rose 4% at Primark’s UK stores open for more than a year in the 16 weeks to 6 January, analysts estimated.
The clothing chain said it had benefited because it kept prices steady. Many rivals had increased prices in response to rising costs caused by the fall in the value of the pound since the Brexit vote.
Kate Ormrod, an analyst at GlobalData Retail, said Primark’s strong end to 2017 in the UK, after 10% total domestic growth in its previous financial year, meant it was likely to overtake Next.
Primark holds a 6.9% share of the clothing market by value, compared with Next at 7.1%. Marks & Spencer remains the UK’s biggest clothing retailer with an 8.1% share.
“The clothing sector is polarised, as mid-market players such as Next, M&S and Debenhams lose out to premium and value rivals, with Primark adept at capitalising on shoppers trading down,” Ormrod said.
All three chains are closing stores while Primark continues to expand. All of Next’s growth over Christmas was online, where sales rose 13.6%; its high street stores suffered a 6.1% slump.
In contrast, Primark plans to open 1.2m sq ft of space internationally this year. In the UK, it opened a store in Charlton, south London, and a larger outlet in Rotherham in November.
The rise of the cut-price clothing chain mirrors the changes taking place in the grocery market where traditional supermarkets are losing share to discounters Aldi and Lidl.
John Bason, the finance director of Primark’s parent company, Associated British Foods (ABF), said the number of visitors to its UK stores had risen, and womenswear sales were up despite many of its rivals reporting a tough Christmas, particularly on the high street.
“It’s all about the merchandise and the prices we’ve got,” he said. “There was no inflation across the piece.”
Primark performed significantly better in the UK than in the rest of Europe where analysts said sales fell up to 6% at established stores.
Total sales for the group rose 7% as it opened 8% more space, suggesting an overall 1% fall at established stores over the period.
Shares in ABF slid 3.6% on Thursday as analysts were disappointed by the poor performance in other European countries and a 12% fall in revenues at the group’s sugar business amid falling prices for the commodity.
The decline across much of the continent was partly caused by unseasonably warm weather in October in many countries. Sales at Primark’s existing stores, particularly in the Netherlands, were also down because the retailer had opened more stores.
Primark’s strong performance bucks the trend in the UK as it does not sell goods online and so is missing out on the shift to home deliveries.
