Today’s news in brief-5/11/24
Primark’s profits surged by 51% to £1.1bn in FY24, as its parent company, Associated British Foods, credited a significant rise in profitability and returns amid ongoing investment efforts. Total group sales grew by 6% to £9.4bn, despite summer fashion sales being dampened by poor weather in H2. Notably, Primark reported strong performances in the US, France, Spain, and Italy, with UK and Ireland sales—representing nearly half of total sales—rising by 2%, although like-for-like sales dipped 1.6% in H2 due to adverse weather. Autumn/Winter sales showed promising growth as the retailer maintained a 6.7% market share in the UK.
Asos reported widened losses of £379m for FY24, up from £296.7m the prior year, amidst an 18% drop in revenue to £2.9bn as it executed its Back to Fashion turnaround plan. The strategy, which includes clearing old inventory and refining its product model, has reportedly shown “green shoots,” with new stock performing well in recent months. Asos completed stock clearance, reducing inventory by 50% since FY22, while achieving a 24% year-on-year sales increase in new products, reflecting strong demand for full-price items. The retailer anticipates a 60% rise in adjusted EBITDA to between £130m and £150m in FY25, aiming for sustainable growth.
UK retail sales saw a modest rise of 0.6% in October compared to 2.6% in the same period last year, hindered by budget uncertainties and rising energy costs, according to the BRC. While food sales rose by 2.9% over the past three months, non-food sales declined by 0.1%, with in-store non-food sales falling by 1.2% year-on-year. However, online non-food sales rose slightly by 0.4%, following an average decline of 2.5% in October 2023. The BRC noted a later-than-usual October half-term, which it expects will boost November sales, while the mild weather has delayed winter purchases.
John Lewis has joined other major UK retailers in partnering with Klarna to offer a “Pay in 3” buy-now-pay-later (BNPL) option, allowing customers to spread payments over 60 days without interest. Klarna, already a leading BNPL provider among UK retailers, aims to attract a new customer demographic to John Lewis, traditionally known for its high-quality products. Klarna’s average user age has shifted over time, now standing at 38, with over-65s as the fastest-growing user group.
