Penneys stores will be well-stocked for the busy Christmas sales period, the discount clothing retailer’s owner has said, despite supply chain disruption and inflationary pressures.
Primark – which trades here as Penneys – has experienced further supply chain disruption in recent weeks. This has included temporary closures at dispatch ports, limited sea container availability and congestion at destination ports.
The overall effect of that has been delays in receiving stock from suppliers and in delivery to store.
However, Associated British Foods (ABF) – the agriculture and ingredients to retail conglomerate which owns Primark/Penneys – has said its stores will have good stock availability for the Christmas trading period.
A spokesperson said the business expects to be well-stocked in all of its trading markets this Christmas, including Ireland.
"We're basically saying that we've got good stock cover for Christmas, our stores will be full," ABF finance chief John Bason said.
He said there would be limited stock cover on a small number of Primark lines which customers "may struggle to even see".
Mr Bason also pledged that Primark's prices for autumn/winter stock would be flat versus the 2020-21 year.
"We're not putting Primark prices up," he said.
The business was able to take this stance because Primark was benefiting from transaction currency gains arising from the weaker US dollar, improved store labour efficiency and lower operating costs, Mr Bason said.
Primark posted an adjusted operating profit of £321m (€375m) for the 12 months to mid-September; down 11% on the prior year. Its revenues fell 5%, year-on-year, to £5.6bn.
Nevertheless, ABF expects to see a £2bn sales bounce in the coming 12 months on the back of a full reopening of its shops around the world.
The group said it expects Primark sales to increase by at least the estimated £2bn lost to shop closures due to Covid restrictions.
Sentiment was also boosted by Primark predicting its store estate will grow from 398 currently to 530 in 2026, by it forecasting "significant progress" in earnings and the payment of a special dividend as part of a new capital allocation policy.
The group said Primark was not immune to the challenges of supply chain, raw material cost and labour rate inflation.
"However, we currently expect the impact of these to be broadly mitigated by the transaction currency gain arising from the weaker US dollar, improved store labour efficiency and lower operating costs," it said.
Primark is also expecting upward pressure on its effective tax rate due to the impact of corporation tax increases already enacted in the UK and the proposed increase in Ireland.
Primark currently operates 36 Penneys stores in Ireland. One more will open next year and the retailer is also planning a €118m distribution centre in Co Kildare.
• additional reporting Reuters