Associated British Foods PLC’s (LON:ABF) Primark has repeated it will not set up an online platform although rivals boohoo Group PLC (LON:BOO) and ASOS PLC (LON:ASC) have posted strong lockdown sales.
The adamant offline stance has cost huge amounts of money to the FTSE 100 firm, which expects to lose £1.05bn if the current lockdown restrictions remain in place until the financial half-year end on February 27.
Meanwhile, pure-play online retailer boohoo has upgraded guidance and expects full-year revenue to rise up to 38% after sales in the four months to December surged 40%.
Similarly, fellow e-commerce giant ASOS said full-year profit before tax is likely to be at the top end of market expectations after the 23% sales jump in the same period topped forecasts.
@nessymon Because you wouldn’t like to see our amazing prices increase and we don’t want to be mean to your wallet!
— Primark (@Primark) January 14, 2021
However, Primark won’t go online to keep the prices down, while it is also believed it wants to avoid the high costs of returns, though ASOS said there have been fewer than usual during the pandemic.
how many lockdowns will it take from primark to start selling items online????
— Jada-Chanté (@_jadachante1) January 12, 2021
“In many ways Primark has been resting on its laurels and its huge fan base of shoppers, hooked into its social media channels, who have flocked back through the doors when restrictions have eased. But the fresh spike of infection rates, caused by the new infectious strain have brought a whole new level of uncertainty,” said Susannah Streeter, analyst at Hargreaves Lansdown.
“It’s unclear when stores will be able to reopen and loyal customers who may have held out on purchases waiting for business as usual to resume, may be tempted to test the water with rivals online… The way fashion followers shop has changed dramatically over recent years, and Primark now risks finding itself behind the curve.”
I wish people would stop going on about how much they want @Primark to trade online ????????♀️. Absence makes the heart grow fonder now give it up!
— Gemma Lynsey (@thegemword) January 14, 2021
Nonetheless, shares in AB Foods rose 1% to 2,244p on Thursday afternoon, but remain 15% below pre-pandemic levels.
According to Shore Capital, the wider business remains in “rude health” despite a bruised retail segment, as all food-related activities are trading above expectations.
“Whilst Retail remains under pressure in the short term, we continue to see still immature Primark as a medium/long term winner and despite a requirement to lower short term forecasts to reflect what is likely to be another extended Lockdown period,” the broker concluded.