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The future of Primark is in focus

By Donald C McFetridge

Published 04/11/2015

Primark
Primark

Over the past few years it looked as though there was no stopping Primark. Quarter after quarter it reliably published trading results which put other retailers to shame as it continued to implement its carefully-planned development strategy.

Primark does not stand alone; it's part of a much bigger empire - Associated British Foods (ABF) - which also owns a number of highly-rated food and agriculture businesses, most notably Twinings and Allied Bakeries.

That's where the story starts to get interesting, because yesterday it published its yearly results for the group as a whole, and it has been widely acknowledged by analysts all over the country that these results were not nearly as good as had been anticipated.

Various explanations were provided and much narrative was published in order to let shareholders know there were wider global economic issues at the root of the problem, for example falling food prices and significant currency movements, as well as EU sugar prices continuing to drop.

Having said all this, it is interesting to note that current ABF results look much less flattering than they did this time last year, with pre-tax profits of £717m, down from £1.02bn.

While Primark's operating profit rose 2% to £673m, it is well worth recording the fact that, according to online bloggers and companies like Trustpilot.com, a large number of consumers are starting to become more than slightly disgruntled with the company.

Consumers are complaining about poor customer service (both in-store and online), poor-quality merchandise (even though it's cheap), long queues in the stores, staff attitudes and being charged twice.

Some online comments have also indicated that the company is not perceived as being environmentally-friendly and that stores (at peak times) can actually appear to be "madhouses".

Primark is no exception to the fact that there is a retail life-cycle and every retailer has its day.

But the question remains: what will the future hold for the company as it continues to internationalise in countries like Italy and the US?

Only time will tell.

Donald C McFetridge is a retail analyst at the Ulster University Business School

Belfast Telegraph

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