While Primark rides the financial wave.
People are turning towards cheaper, lower quality clothing, and cheaper everything, as the recession continues to reign, latest retail figures have suggested.
Today Marks & Spencer and Primark both released their financial results. However, while the classic clothing retailer reported pre-tax profits of £290 million for the six months to the end of September – down 9.7 percent- from the same period last year, Associated British Foods, owner of Primark and AB Sugar, saw a rise in earnings.
Pre-tax profit rose to £761 million for the year ended September 15th from £757 million a year earlier. Revenue for the year increased to £12.25 billion from £11.07 billion previously.
Primark, which has more than 230 stores, grew revenue by 17 percent, while the company also saw a four percent leap in operating profit to £351 million.
In contrast, Marks and Spencer reported its clothing and homeware like-for-like sales, were down 4.3 percent, while food sales did something to help, growing by 3.4 percent, or 1.1 percent on a like-for-like basis, which strips out the effect of new stores.
Marks and Spencer in the past, has very much relied on its trademark name and quality clothing reputation to drive footfall. However, with the rise of bargain fashion outlets it has struggled.
The brand has in the past has also tried to move past its “middle aged women” reputation, investing heavily in celebrity filled adverts and creating diffusion lines such as Autograph and Limited Collection, to appeal to a younger market.
And it’s still trying. Yesterday it was announced that Janie Schaffer, currently chief creative officer at Victoria’s Secrets, will succeed Frances Russell as director of lingerie and beauty early next year.
However, it seems the problem lies in the pricing.
It is clear, through looking at these figures, that younger generations are after a bargain, opting for cheapness over quality, especially when it comes to high fashion items and Primark seems to be able to offer this.
Whether Marks and Spencer will sacrifice its high quality reputation and move into this line, remains to be seen.