Primark can’t dodge Europe’s retail woes as store sales slow

BLoomberg

Associated British Foods Plc’s Primark reported a slowdown in sales growth in the first quarter, showing that even the most reliable fashion retailers aren’t immune to the rise of online shopping.
At constant currency rates, Primark’s sales rose 7 percent in the 16 weeks to January 6, the London-based company said. That missed analysts’ estimates for growth of
10 percent, sending AB Foods shares down as much as 2.6 percent in early London trading.
“Northern European markets were the toughest for us in October, particularly in Holland,” CFO John Bason said. “Some markets were down double digits.”
Primark’s underwhelming sales surprised investors, who thought the chain’s rock-bottom prices would make it one of the winners of the holiday season. The report joins a raft of disappointing updates from fashion retailers such as Hennes & Mauritz AB and Marks & Spencer Group Plc, and raises questions over whether Primark should add an e-commerce presence to its network of vast, brightly lit stores.
Although Primark doesn’t sell online, it does take advantage of the web, Bason said. “In the UK we have a fantastic range of merchandise and we are using social media to engage with customers really well,” he said.
Despite difficult business in continental Europe, the retailer said its same-store sales growth and market-share gains in the UK were strong and sales in the US continued to make progress.