Primark sets trend for Christmas

PrimarkFashion chain Primark showed rivals a clean pair of heels this Christmas as cash-strapped shoppers stocked up on budget trends.

Demand for Christmas jumpers and the popularity of all-in-one pyjamas, known as "onesies", helped drive a 25% increase in sales at the chain over the 16 weeks to January 5, parent company Associated British Foods said.

The group's 14 store openings in Europe, including its second shop on London's Oxford Street, helped boost the figures but City experts suggest the like-for-like result excluding expansion still rose by 9% in the period.

The better-than-expected performance for Primark is in contrast to rival Marks & Spencer, which saw like-for-like sales of general merchandise - which includes clothes - dip by almost 4% in its Christmas figures.

Neil Shah, analyst at Edison Investment Research, said: "Primark has delivered a lesson in clothing retailing to the UK high street with the best of any sales figures over the final quarter."

Primark's strong Christmas comes on the back of a 15% jump in operating profits and a 3% hike in like-for-like sales at its year end in September.

The group, which has 256 Primark stores in Europe, also said lower cotton prices had pushed profit margins ahead of the same period last year.

AB Foods - the owner of British Sugar as well as household brands Kingsmill, Ryvita and Twinings - said the strong performance from Primark had helped boost group revenues, which were up 10%.

Sales in its grocery arm were flat, but it said it had seen strong growth in its tea business in the UK and US, and for Ovaltine in developing markets.

Sugar revenues were 12% ahead of last year, but the group warned profits would be lower because of smaller production levels and higher sugar beet cost.

High Street casualties
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Primark sets trend for Christmas

Administrators sounded the death knell for Woolworths in December 2008, leading to store closures that left 27,000 people out of work. Since its collapse former Woolworths stores have become a blight in many town centres and more than 100 of the large stores still lay vacant in January 2012.

Loyal customers didn't have go without the family favourite store for long however as it reappeared online as in 2009, after Shop Direct Home Shopping bought out the Woolworths name.

The greetings cards specialist became the latest highstreet casualty in May with 8,000 jobs on the line when it was forced it into administration. Its biggest supplier, American Greetings, then bought Clintons out of administration and put the retailer through a rebrand including a new logo and complete in-store revamps.

Its contemporary format includes new fixtures and fittings and easier to navigate stores, and will be rolled out to all 400 UK stores at the cost of £16million. Bosses aim to bring the brand back to profit within two years.

Poor sales in the run up to Christmas was the final nail in the coffin for several struggling chains, including lingerie retailer La Senza, which went bust in January 2012 with 146 shops and 2,600 staff. Kuwaiti retailer Alshaya bought part of the business, which saved 60 shops and 1,000 staff.

La Senza has been struggling in a similar way to other specialist shops such as Game and Mothercare, which have been hit by cut-price competition at supermarkets and have no alternative products to help shoulder losses.

Stricken retailer Blacks Leisure, which employed 3,600 staff across 98 Blacks stores and 208 Millets stores, went into administration in Janurary 2012 after failing to find an outright buyer.

Soon after its stores were bought by sportswear firm JD Sports in pre-pack deal - an insolvency procedure which sees a company being sold immediately after it has entered administration – which saw most of Blacks' £36 million of debt wiped out.

Fashion chain Bonmarche, which was part of the Peacock Group, was sold in January when the group collapsed due to unsustainable debts, resulting in 1,400 job losses and 160 store closures. Private equity firm Sun European Partners bought 230 stores, which continue to trade with 2,400 staff.

Peacocks collapsed under a £740 million net debt mountain in January 2012 in the biggest retail failure since Woolworths. Despite being sold out of administration to Edinburgh Woollen Mill in a deal that saved 380 stores and 6,000 jobs, administrators from KPMG were forced to close 224 stores with immediate effect. This lead to 3,350 redundancies from stores and Peacocks head office in Cardiff.

The high street name continues trading as bosses work to stabilise the situation, yet a further blow was dealt this month with news that the firm's pension fund is in £15.8 million shortfall as a result of the collapse.

Game buckled under its £85m debt pile in March 2012 and was placed into administration after being unable to pay a £21m rent bill. Administrator PwC immediately closed 277 shops, with the loss of 2,000 jobs. Soon after, investment firm, OpCapita bought 333 Game stores, saving more than 3,000 jobs.

Game's demise followed a string of profit warnings and the failure of nervous suppliers, including leading names Electronic Arts and Nintendo, to go on providing the latest games, further damaging poor sales.

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