ABF’s Primark finally hits the mark

ABF’s Primark finally hits the mark
Fans have been waiting for a while to get their bargain-hungry hands on a deal or two.
Gemma Boothroyd
Published
July 1, 2021

With no ecommerce platform to speak of, Primark lines were around the block once stores re-opened in April.

And who really needs a digital offering when shops are boasting queues 100 shoppers strong?


Primark queue lineup meme Freetrade
That’s a lot of pent up demand for a cheap set of pjs and slippers.


Retail sales were up 207% in the third quarter, reaching £1.6bn. Which goes to show it might be all about big brands and flashing the cash on social media but, back in real life, UK shoppers are all about the Primarkisation, not premiumisation. 

Because for all the recent brouhaha over fast fashion’s questionable supply chains (at best) and seeming lack of regard for sustainability, the industry isn’t really floundering. 

With Primark’s revenues zooming past analyst expectations and setting two-year record highs, clearly, discount leggings are as alluring as ever.

ABF Primark share price
Past performance is not a reliable indicator of future returns. 

 

No digital? No dilemma

One of the advantages of having no online operations is that Primark’s been able to nail its inventory management. 

Most fast-fashion retailers had to rely on heavy discounting to push the going-out styles in low demand since lockdowns hit. 

But the timeliness of its stores reopening boded well with restrictions lifting. And Primark’s been able to mix its old inventory in with the new. 

So it’s been less pressured to cut costs. That’s good, since it’s hard to imagine them getting any leaner.

Plus, as one of the few remaining members on the UK’s dwindling high-street, Primark’s likely going to benefit from the thinned out physical retail scene. The fat’s been trimmed, now that many former kingpins from Debenhams to Topshop have boarded up shop. 


Get that bread


Reflecting a whopping 44% of group revenue, Primark is clearly ABF’s crown jewel. 

But ABF’s grocery division was a decent buffer during the few months when shops were still closed.

Although the segment saw some high highs during last year’s banana bread and sourdough lockdown fanfare, it’s since fallen by 3% to £871m for the third quarter. 

Makes sense, given those crazes have now lost some appeal up against a pint at the pub.

But when you compare the numbers against pre-pandemic levels, grocery was actually up 6%. All things considered, that’s some pretty tasty growth.

Past performance is not a reliable indicator of future returns. 

 

Source: FE, as at 30 Jun 2021. Basis: bid-bid in local currency terms with income reinvested.


What are your thoughts on the investment case for ABF and Primark? Let us know on the community forum.

Join the discussion about ABF and Primark

At Freetrade, we want to make it easy and accessible for everyone to invest in the stock market. That’s why we built our stock trading app from the ground up and focussed on helping customers achieve better, long-term financial outcomes. Start with an investment account or a tax-efficient account like an investment ISA or a SIPP pension


Important Information

This should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice.

When you invest, your capital is at risk. The value of your portfolio, and any income you receive, can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future results.

Eligibility to invest into an ISA and the value of tax savings depends on personal circumstances and all tax rules may change.

Freetrade is a trading name of Freetrade Limited, which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales (no. 09797821).

Related articles

Most read

Simple pricing plans

Choose how you'd like to pay:

Annually

Save 17%

Monthly

Annually

Save 17%

Monthly

£0.00/mo

Accounts

GIA pink
General investment account

Benefits

  • Commission-free trades (other charges may apply. See full pricing table.)
  • Trade USD & EUR stocks at the exchange rate + a 0.99% FX fee
  • Fractional US Shares
  • Access to more than 4,700 stocks, including the most popular shares and ETFs
  • 1% AER on up to £1,000 uninvested cash
£4.99/mo

£59.88 billed annually

£5.99/mo

Billed monthly

Accounts

GIA white
General investment account
ISA
Stocks and shares ISA

Benefits
Everything in Basic, plus:

  • Full range of over 6,200 US, UK and EU stocks and ETFs
  • Trade USD & EUR stocks at the exchange rate + a 0.59% FX fee
  • Automated order types, including recurring orders
  • Advanced stock fundamentals
  • 3% AER on up to £2,000 uninvested cash
£9.99/mo

£119.88 billed annually

£11.99/mo

Billed monthly

Accounts

GIA white
General investment account
ISA
Stocks and shares ISA
SIPP white
Self-invested personal pension (SIPP)

Benefits
Everything in Standard, plus:

  • Trade USD & EUR stocks at the exchange rate + a 0.39% FX fee
  • Priority customer service
  • Freetrade Web beta
  • 5% AER on up to £3,000 uninvested cash

Download the app to start investing now



When you invest your capital is at risk.