Chain has long avoided deliveries in Great Britain but says a shift now offers ‘opportunity for profitable growth’
Primark will offer home delivery in Great Britain for the first time as the fast-fashion retailer seeks to revive flagging sales.
The company, which already offers a click and collect service, has long avoided home delivery, arguing that its low prices made it too difficult to absorb the cost of packing and shipping orders.
However, the clothing chain, which will spin off from its owner Associated British Foods (ABF) next year, disclosed on Thursday that it had acquired an automated fulfilment facility in Sheffield and would offer home delivery “in the future” in the UK, except for Northern Ireland.
“Primark’s digital maturity, including the success of click and collect, and online market developments, mean there is now the opportunity for profitable growth through the home delivery channel,” it said in a statement.
The push into home delivery came as the company told investors that it expected Primark’s sales to drop 3% in its quarter ended on 12 September, with the UK and Ireland up 0.4% but continental Europe down 4.3%.
George Weston, the chief executive of ABF, said Primark’s trading in Europe “remained challenging”, but the initial customer reaction to its “iconic value” campaign – in which it cut prices across hundreds of autumn and winter products – had been encouraging.
Dan Coatsworth, head of markets at the broker AJ Bell, said Primark, faced with slowing sales, “clearly had no choice but to adapt to the modern retail world” and adopt online delivery.
Shares in ABF, which is listed on the London Stock Exchange, fell by almost 10% on Thursday, taking its year-to-date fall to 14%.
Analysts at the broker Jefferies, an investment bank, said Primark looked particularly vulnerable as it started its final quarter of the year.
“In an environment with rising concerns over both the health of the consumer and of industry input cost challenges, Primark continues to be among the most disadvantageously positioned clothing retailers,” they said.
The news comes as Primark prepares to split from its parent company ABF, the owner of Twinings tea and Kingsmill bread. The demerger, which is likely to complete in December 2027, is expected to create two new FTSE 100 companies, with analysts predicting that Primark could be valued at as much as £9bn, and the food business £4bn.
Weston, a member of the billionaire family that controls ABF and who is the long-term chief executive of the group, is to lead the food business after the demerger.
Eoin Tonge, an experienced former ABF, Marks & Spencer and Greencore finance director, will remain as chief executive of Primark.
The fashion chain, which was founded by Arthur Ryan under its Irish brand name, Penneys, in Dublin in 1969, opened its first shop in Britain in 1974, in Derby. It employs more than 80,000 people around the world.
