Primark Is Expected To Be Swept Away By The Market.

Under such a sluggish global apparel retail market, fast fashion brands have been falling down one after another. In addition to the rapid growth of the sales and profits of the Indo Textile Group, the leading parent Zara parent company, after the brief challenge of last fiscal year, H&MHennes &Mauritz AB, the world's second largest apparel retailer, set its lowest sales growth rate in the past three years.

Now, the market is expected to fall into a recession in recent years, with a very low price and a strong share of Primark in Europe and the United States.

Morgan Stanley (Morgan Stanley) analyst Geoff Ruddell expressed concern about the same store sales performance of Primark in the past 18 months in the latest research report, and at the same time, according to market research company Kantar Group

A weaker retail study found that the Primark will continue to decline in the first half of fiscal year to the end of August, with a 1% decline in same store sales, and the same store sales will also decline for the first time in more than 15 years.

Geoff Ruddell said it was not clear why the Primark sales slowed down significantly, but it was certainly related to structural factors, including the reduction of passenger traffic on the high street.

Transfer to e-commerce.

Data show that as of February 27th, Primark's medium-term revenue increased 4.7% to 2 billion 667 million pounds over the same period, excluding the impact of the exchange rate rose 7%, slightly lower than the group's previously expected 7.5%.

Growth is mainly driven by new retail sales in the United States and other markets, while sales in the same store are down less than 1%, which is also unchanged from the group's expectations in the same period last year.

In terms of profit,

The pressure on the purchasing cost of the strong dollar continued to be reduced. The adjusted operating profit decreased by 2.8% to 313 million pounds a year, excluding the exchange rate effect, and the operating profit margin also decreased by 1% to 90 basis points to 11.7%.

H&M Hennes&Mauritz AB released the two quarter earnings report yesterday also showed that in the first three months of the end of May, profits were affected by rising procurement costs and a 17% drop in sales.

Primark has been refusing to build e-commerce sites, although three years ago, a short test of water in the UK's largest fashion business ASOS PLC sold, but three months later announced the withdrawal.

At that time, John Bason, chief financial officer of the British Union food group of Primark parent company, said that Primark would not cooperate with other electric providers, nor did it plan to launch its own trading website.

He acknowledges that the lack of online sales will limit the scope of Primark customers, but the current sales density and customer flow are enough to drive brand sales growth.

This is the same as KM, which has never been developed by the electricity supplier. It seems that shops that are often crowded by offline stores are very vigilant for online development. On the one hand, they are worried about the high cost of logistics. On the one hand, they avoid online services and affect the company's offline work.

Analyst Geoff Ruddell lowered Primark's net sales growth forecast from 15%-20% to 10%-12%, and its independent valuation fell from 22 billion 200 million to 15 billion 100 million.

But he stressed that the brand is still optimistic about the cheap and fast fashion business model and the development prospects of the United States, but believes that sales in the United States will have a real boost to its performance in the 2019 fiscal year.

As Primark contributed nearly 65% of its operating profit to the British Union food group, analyst Geoff Ruddell lowered its Associated British Foods PLC stock rating from "win market" to "flat market performance" according to the gloomy Primark sales prospect, and the target price dropped substantially closer to 1/4 to 2650 pence, and the original target price was 3500 pence.

Ying Lian food group will release its 3-5 quarter three quarter earnings in July 7th.

The sales of H&M Hennes&Mauritz AB in the same period were only 5% higher than the local exchange rate. After excluding the contribution of the new sales area, Credit Suisse Group AG Credit Suisse estimated that the group's same store sales fell by 5.3%, and the group management blamed 3. In the main European markets in April, the weather was extremely cold and cold, which inhibited the demand for spring clothes.