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Flexibile supply chain is key, says Primark finance boss

Primark’s “responsive supply chain” is key to riding out unpredictable weather patterns and shifts in customer behaviour, the finance director of the value retailer’s parent company Associated British Foods said today.

Primark

“Primark has done an excellent job of managing the inventory we had in January and February,” John Bason told Drapers. “We kept a close eye on how sales were developing last autumn [and reduced our buying volumes] which ultimately led to less markdown in January and February. It has shown in our bottom line.”

When pressed to put a figure on it, he said Primark had a few tens of millions fewer units of products across the entire group, compared to the same period last year.

He described the current UK market as “soft”, which he thinks is down to a variety of factors. “The weather is odd: for late April it is still very cool and UK consumers, although they may have more disposable income after food and petrol, seem to be spending less on fashion retail at the moment.”

But he felt the chain’s robust network would be able to respond if situations change, such as if the UK is faced with a cold winter rather than the mild weather of the previous two years.

“We have some flexibility depending on how things progress through the season,” he said. “We have a responsive supply chain so we can react if things look like they are going to change in the first few weeks of trading.”

Primark today reported that its adjusted operating profit fell 1% in constant currencies for the 24 weeks to February 27 compared with the previous year, and 3% at actual currency rates, as the dollar strengthened against the euro.

Sales were up 7% in constant currency on 2015, driven by increased retail selling space.

“It has been a difficult market in the UK, I think we need to recognise that,” he said. “But the UK is half of our group now [in terms of selling space]; we are becoming very international, particularly when you consider our recent successes in France, the US and of course Ireland.

“We just need a few weeks of some proper spring weather [in the UK] and things will look a lot different.”

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