Trading updates expose retail online divide during latest lockdown 

Penneys-owner Primark has estimated that it could lose out on €1.7bn in sales if lockdown measures keep its shops closed until the end of March

Primark — which trades here as Penneys — has warned that it could lose €1.7bn in sales if shops remain closed up to the end of March. Currently more than 300 of its shops are closed, including all of its Irish and UK outlets.

A slew of Christmas trading updates have laid bare the widening divide between high street retailers and those able to ride out Covid restrictions with an online offering.

Updates from the likes of Primark, Boohoo, and Tesco amply show how lockdown has impacted online, offline, and supermarket retailers.

Penneys-owner Primark has estimated that it could lose out on £1.5bn (€1.7bn) in sales if current lockdown measures across its main markets keep its shops closed until the end of March. 

The discount clothing retailer currently has 305 of its 389 worldwide stores closed due to Covid-19 restrictions, representing 76% of its retail selling space.

It remains open in the US and parts of Europe, but its 36 stores in the Republic and its 190 UK shops are shut.

Primark recently warned that it would take a £1.05bn sales hit if lockdown measures continued to the end of February. 

However, John Bason — the finance director of Primark’s parent, Associated British Foods — said a further £500m could be added to that if Primark shops remained closed until the end of March.

He was speaking on the back of the group’s latest trading update which showed Primark’s sales fell 30% year-on-year, in the 16 weeks up to the beginning of this month.

Mr Bason said he was confident of future growth for the retailer despite not knowing when current lockdown restrictions may end and physical shops may reopen.

Primark — which trades in the Republic as Penneys — famously does not sell online. The company has also reiterated that it has no plans to cater for online sales, saying operating, distribution, and handling costs would force it to raise product prices in its shops and would nullify its main selling point of low-cost affordable clothing.

Rival fashion retailer Boohoo, however, has raised its annual revenue target having seen online sales boosted over the Christmas trading period.

The British fashion group — home to brands including PrettyLittleThing, Nasty Gal, and MissPap — expects revenue growth of 36% to 38% for the year to the end of February, above the already upgraded forecast of 28%-32%.

Rival ASOS, or As Seen On Screen, also raised its forecast earlier this week as trading during the holiday season exceeded its expectations.

While more conventional retailers have struggled with a collapse in footfall over the past year, the crisis has only added to the gains made by Boohoo and other e-commerce players as people stuck at home switch to shopping online.

Supermarkets have remained open during the entire Covid-19 crisis and have thrived. 

Recent figures from consumer insights agency Kantar Worldpanel showed that Irish consumers spent €1.2bn on groceries in December — marking a new monthly sales record as families celebrated a smaller-scale Christmas at home.

However, online is playing a part in this segment also. In its trading update, supermarket giant Tesco said it saw group sales grow by nearly 7% over the Christmas period, which it measures as the six weeks up to January 9. It said its sales in the Republic grew by 12.4% year-on-year during the period, with this heavily boosted by online grocery sales, which grew by more than 70%.

Meanwhile, new Tesco group CEO Ken Murphy, who originally hails from Cork, has confirmed that the retailer has seen disruption to its supplies to the island of Ireland because of Brexit changes.

“We have seen some limited disruption into the Republic of Ireland and into the North of Ireland, but we’re working very closely with government on both sides of the Irish Sea to smooth the flow of product,” Mr Murphy said.

He said Tesco’s product availability in both markets “remains strong”.

The disruption was limited to certain categories such as short shelf-life ready meals, Mr Murphy said.

“Inevitably there are bedding-in issues, teething issues, that you would expect with any new process that’s been set up at relatively short notice,” he said.

“We’re working our way through those and we would hope over the coming weeks and months that we will end up with a much smoother flow of product.”

Meanwhile, Whitbread — which owns the Premier Inn chain of budget hotels — has said it has cut around 1,500 jobs through a restructuring, albeit less than the expected 6,000 job losses.