Spanish stores keep Primark afloat as sales plummet elsewhere due to lockdowns

BRANCHES in Spain have 'saved' low-cost clothing brand Primark in the past year, when its turnover elsewhere dropped, in many cases, to zero, according to sales figures.

One of the few international fashion chains which does not have an online shopping facility, Primark has been at the mercy of the ebb and flow of customers in its physical premises – and with varying restrictions and lockdowns across Europe since March 2020, sales have taken a battering.

The chain, originally from Ireland but now owned by Associated British Foods (AB Foods), recorded a fall of 40.5% in its sales from 2019, taking a hit valued at around €1.28 billion.

Although it tends to be associated with the UK high street, over half of Primark stores open for trade worldwide at the moment are in Spain – 42 out of 77 – since, in other countries, including in Britain, lockdowns mean any business premises not considered 'essential' is unable to operate.

At the height of the 'third wave' of Covid cases in Spain, only 10 of Primark's 50 stores nationwide were shut.

Even in the run-up to Christmas, much of the UK was on what was then the maximum restriction level, Tier 3; by Boxing Day, the whole of London and the south-east of the country was on Tier 4 and, by around New Year, back in full 'stay-at-home' mode.

In Spain, however, non-essential shops were only closed from mid-March to May, after which retailers were practically all open again subject to limitations on numbers of customers on the premises.

At present, Spain's individual regions have set their own restrictions, including early closing for retailers other than supermarkets and pharmacies – shops typically have to shut around two hours earlier than usual, depending upon where they are in the country.

But other than in a handful of isolated cases where specific towns went into temporary lockdowns due to high contagion rates, retailers have largely been able to stay open for the past nine months, even if not under normal conditions.

As a result, Primark's sales fell by 15% overall in Spain in the last year, but in other countries with stricter measures, the drop has been drastic – on occasion, and in some parts of the world, by 100%.

In a normal year, Primark Spain would account for around 20% of the brand's sales – in 2019, turnover for Spanish stores came to €1.5bn out of the total of €8.5bn.

Spain has the second-highest number of Primark branches by country in the world, beaten only by the UK.

Over the last year, though, from September 2020 to February 2021 inclusive, Primark's turnover was around €2.56bn, of which more than 50% came from shops in Spain.

Only a handful of Primark stores in Spain are waiting to reopen – fewer, in fact, than anywhere else on earth – and the company is expecting to be back in full business on Spanish soil earlier than in any other country. 

Six branches are set to reopen from Monday (March 1), and the remaining two from March 11.

Britain continues to be Primark's biggest market, meaning that although Spain has 'saved' the brand thus far, the company is pinning its hopes on prime minister Boris Johnson's announcement that the nation will start to 'reopen' from March 8.

The 153 Primark shops in England will be back in business from April 12, whilst Scotland's 20 stores will open again from April 26, although as yet, Wales has not confirmed when clothing retailers will be trading.

Germany's 32 Primark shops will open their doors again from March 8 and The Netherlands' 20 branches will be letting customers in from March 15.

Despite lockdowns and restrictions having hit the brand hard, AB Foods has no plans to launch an online version of Primark – instead, it intends to continue with its strategy of opening more physical premises which, it says, works out cheaper in terms of running costs than internet sales, which involve website maintenance and delivery expenses.

Keeping overheads down means Primark can continue to lead the field in cut-price fashion – in Spain, it was only beaten by Zara and Mango in sales volume in 2019.

The company remains firmly committed to investing in the Mediterranean country, where its network of stores is the fastest-growing on earth: Between this and next year, seven new branches are set to open, providing around 650 jobs in Cádiz, Girona, San Sebastián, Madrid, Bilbao, Vigo and Marbella.

And Primark is not the only source of income from Spain for AB Foods – the company also owns Azucarera, the Spanish sugar-producing firm, which quadrupled its profits, to €111 million, in the last tax year thanks to cost-containing, increased sales and a fall in price of sugar beet.

The nature of sugar as a staple product means it was not affected by the pandemic, although Azucarera has struggled in the past few years to recover from a string of poor results, largely due to rising sugar-cane prices.

It was owned by Ebro Foods until the Anglo-Irish firm bought it in 2008.

AB Foods is run by one of the UK's wealthiest families, the Wetsons, who own other major brands including Selfridges and Twinings.