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Primark announces 17% profits rise

As we look at the fall of 34% in the profits of Marks & Spencer it may look strange to see Primark announcing a 17% increase in profits for the same period. However when you check out the underlying quality and target market of the two companies that may be some obvious reasons as to the change in trading.

Primark has always targeted the lower end of the market with goods sold for as little as a few pounds against the higher quality higher cost end of the market which Marks & Spencer has serviced for so many years. As the economy continues to suffer it was inevitable that the consumer would downgrade spending to align with income which has seen an increase in lower ticket priced clothing and other goods.

However in the longer term the likes of Primark may struggle to retain their lower cost prices as and when the Far East markets, on which they so depend, recover and costs start to edge higher. However in the meantime this is a perfect opportunity for the likes of Primark to make hay while the sun shines.

It will be interesting to see the divergences in performance between the lower end and the higher end of the UK retail market.

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