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Since the mid 2000s, Primark has emerged as one of the UK's most successful high street chains, now the country's largest clothing retailer by volume according to Kantar, and the clear leader in the value sector, having overtaken Asda's George in 2007. It was named as Value Retailer of the Year in that year's Drapers Fashion Awards, and has collected that or a similar accolade virtually every year since then, most recently in 2014, as best international fashion retailer. Primark continues to operate in the Irish Republic under its original name of Penneys, and there is a growing estate of stores in continental Europe. The business is the remaining UK retail interest controlled by diversified conglomerate Associated British Foods, whose other divisions are involved mainly in packaged foods and ingredients manufacturing.
Primark Stores Ltd
41 West Street
Berkshire RG1 1TT
Tel: 44 (0)118 9606300
Adbrands Weekly Update 22nd Sep 2016: Associated British Foods - which despite its name actually generates some 60% of its profits from the discount clothing retailer Primark - warned that like-for-like sales for that business fell 2% in the financial year just ended, the first such decline in 16 years. Primark has proved an extraordinary growth motor for the group, outperforming its more traditional grocery and ingredients operations. However, according to the group, "unseasonable weather" caused a slowdown in same-store sales in the most recent year. The chain is also virtually the only major fashion store not to sell its clothes online. However, managers and some analysts argue that the same-store decline merely reflects the sharp decline across the whole UK clothing market: "this is a market issue not a Primark issue". Despite the slowdown, Primark's reported sales are expected to rise by 11% as a result of new store openings and currencies.
Adbrands Weekly Update 21st April 2016: British fashion chain Primark reported its first ever decline in like-for-like trading for the six months to February as a result of unseasonably warm weather across Northern Europe, where most stores are situated. However, new store openings in Spain and Italy and encouraging trading in the two new US outlets resulted in a 5% increase in reported revenues (7% at constant rates) to almost £2.7bn. George Weston, chief executive of parent group Associated British Foods, said, "Primark's trading has only been marginally down in the UK, which had been a tough market. In the rest of Europe the numbers are good." The UK accounts for just under half of Primark's sales.
Adbrands Weekly Update 5th Nov 2015: Discount fashion chain Primark was again the star performer among the collected businesses of diversified conglomerate Associated British Foods. Strong international growth, especially in France, helped Primark's revenues to rise by a further 8% to a record £5.35bn, and the first US store opened in Boston in September, just before the group's fiscal year-end. Primark's strong showing offset declines elsewhere in the group, including in its large groceries division, where revenues slipped 5% to £3.2bn. There were even steeper declines in the sugar and agriculture divisions. Group revenues came off 1% to £12.8bn, but pretax profit slumped 30%, as a result of higher commodities, weak trading and impairments against one of its industrial joint ventures.
Adbrands Weekly Update 6th Nov 2014: Low cost fashion retailer Primark delivered another extraordinary performance in the year to Sept 2014, with revenues up by 16% to £495bn, and a 29% jump in operating profit to £662m. Though much smaller than rivals H&M and Inditex, Primark is still delivering much stronger growth, with a growing footprint across Europe. The key challenge ahead is the chain's debut into the US next year. Primark was, as usual, the star performer among Associated British Foods' various businesses. Group revenues slipped 3% as a result of currency fluctuations to £12.9bn. At constant rates growth would have been 1%, but that increase was generated entirely by Primark, with virtually all of ABF's food divisions reporting a decline at constant rates.
Primark's reputation belies the comparatively small size of its retail estate: just under 300 outlets by the beginning of 2016, including 168 stores in the UK and another 36 in Ireland. Under the slogan "Look good, pay less", Primark offers stylish, high quality apparel under a number of different own-label lines including Atmosphere, Denim Co, Secret Possessions lingerie, Backswing sportswear and Primark Essentials womenswear, Cedarwood State and Butler & Webb for men, Rebel for the teen market and Early Days for children. However its core market tends to be teenagers or women in their 20s and 30s.
It operates in the Republic of Ireland under the Penneys name, and opened its first outlets in Spain in 2006 as Primark Tiendas. Following the success of this early test, further stores opened in Spain, bringing the total to 40 by 2015, and there are another 45 outlets in Germany, Portugal, the Netherlands, Belgium and Austria. The first French store opened at the end of 2013, in Marseilles, with considerable success, and others have followed. The first in Paris opened in Spring 2014. The continental stores are usually located in smaller cities or less than prime capital city locations. (The "Paris" outlet is actually in Aulnay-sous-Bois, in the city's suburbs). As a result, the brand has arguably accumulated greater prestige among its customers in mainland Europe, where it is seen as a fashion expert, than in the UK, where many even among its own customers still regard it as a cheap and cheerful discounter. However the most challenging new market will be the US. Primark opened a flagship store in Boston towards the end of 2015, and this will be followed by at least nine more shopping mall outlets also in the North East. The chain took its first steps into Italy in 2016 with an outlet at the Arese Shopping Center outside Milan.
Perhaps the most startling thing about Primark is that it is virtually alone among the major retail chains to still have no full ecommerce operation. The group tested online sales for the first time during 2013 in a limited partnership with e-tailer Asos, but that trial came to an end before the end of the year and was not renewed.
The company is best-known for high-quality merchandise at extraordinarily competitive prices. Like Zara, Primark has streamlined its production systems to ensure the fastest possible turnaround of new designs, many based on the work of designers whose creations sell for thousands rather than tens of pounds. Yet the company also operates an exceptionally effective buying policy, outsourcing its manufacturing to developing markets, and stripping costs and its own overheads to the bone. It maintains an extremely lean management structure in which all store managers have direct phone contact with chief executive Paul Marchant and the small head office team. Stores are large, and leased or bought at rock-bottom prices. Marketing expenditure is limited only to public relations and social media, with virtually no spend on advertising or on price promotions. The result is that almost nothing in Primark's stores costs more than £20, and yet its clothes have been widely celebrated by fashion magazines. The breakthrough came arguably in 2005 when a £12 military jacket "inspired" by Balenciaga was featured in a Vogue fashion spread. As a result, in addition to ordinary value shoppers, Primark's customers also include a discerning clientele who would be unlikely to shop in most other value fashion retailers.
However this pricing policy has led to repeated accusations of unethical trading. In 2006, following a number of largely unsubstantiated media claims, the chain became a member of the Ethical Trading Initiative, a body which seeks to enforce a code of conduct for suppliers from developing countries to guard against exploitation. Primark also maintains its own strict standards for supplier conduct. Nevertheless, an undercover BBC TV documentary team discovered during 2008 that some manufacturing work for Primark garments was being outsourced without the store's knowledge to child workers in India. Although Primark has adapted its policies, and manages a team of 40 in-country ethical inspectors, it is still reliant upon cheap labour in developing markets. It was, for example, one of several well-known fashion brands being worked on in the Rana Plaza factory in Bangladesh which collapsed in 2013 killing 1,100 workers. Although it was not directly implicated (the factory was used by one of Primark's sub-contractors not the store itself) it has made payments of more than $12m since then to families affected by the disaster.
Despite the general downturn in the retail sector since 2008 and 2009, Primark has continued to outperform rivals. Revenues hit a new high of £5.35bn in the year to September 2015, up 8% on the previous period. Operating profit rose marginally to £665m.
Arthur Ryan, long-serving founding chief executive of Primark, passed on that role in 2009 to Paul Marchant. He was named in 2013 as the UK fashion industry's single most influential figure by trade bible Drapers. Other senior managers include John Lyttle (chief operating officer), Breege O'Donoghue (director of marketing & human resources), Katharine Kirk (ethical trade director) and Ben Mansfield (sales director).
Although Primark has only really captured the attention of the media and even most shoppers within the last ten years, the business actually celebrated its 45th anniversary in 2014. Still more surprising perhaps is the fact that for almost its entire history to-date it was run by the same small management team, latterly aged in their 60s and 70s. Primark, or rather Penneys, was originally founded in the Republic of Ireland in the late 1960s as part of what was then a substantial retail empire owned by the Weston family. Fashion wholesaler Arthur Ryan was recruited to run the business - he remained managing director until 2009 and chairman until 2012 - and following success in Ireland, a first outlet was launched in England, in the city of Derby, in 1974. Because of trademark issues with US chain JC Penney, which had already registered the Penneys name in England, the Derby store was launched as Primark. Although the chain continued to expand steadily over the next 20 years it remained well below the radar in the general fashion press.
That began to change during the 1990s as competition on the high street began to create serious problems for less efficient retailers. Since the 1970s, Primark had steadily expanded its footprint in the UK by picking up low-rental stores dropped by larger rivals. Such opportunities became increasingly plentiful during the 1990s, and Primark acquired outlets from the likes of Bhs, the Co-Op, and then in 2000 ten large stores previously owned by C&A. These gave Primark a rising profile in city centres, and its continuing growth and impressive profit margins contrasted noticeably with the travails experienced by other groups. Further acquisitions followed during the early 2000s including several sites formerly operated by Allders. In 2005, the chain purchased 120 outlets of the shuttered Littlewoods retail chain, selling on the majority but retaining 45 of the best locations, including its first large store in London's Oxford Street.
Last full revision 13th April 2016
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