PRIMARK owner Associated British Foods shares dipped as it provided an update with plans to cut jobs.
The retailer delivered a relatively strong trading performance over the festive period with sales up sharply year-on-year but adrift of pre-pandemic levels.
Primark launched a consultation with staff as part of plans to simplify its UK store retail management structure, it said.
It said the move aims to “provide clearer accountability, greater flexibility and more management support on the shop floor”.
While it is creating a new management level role as part of the move, it also stripping out other roles and expects the changes to leave it with around 400 fewer retail managers.
Primark, which employs 29,000 staff in total across 191 stores in the UK, expects the consultation to take place over the next couple of months.
Kari Rodgers, Primark retail director for the UK, said: “The changes we’re proposing will deliver a simplified and more consistent management structure across all of our stores, provide more opportunities for career progression and offer greater flexibility.
“We are now focused on supporting our colleagues who are affected by these proposed changes and will be going through the consultation process.”
Details of the job cut plans came as Primark revealed it had seen a hit to recent trading as the Omicron variant of coronavirus kept shoppers away from stores.
The group said Primark’s UK like-for-like sales were 10% lower in the 16 weeks to January 8 when compared with pre-pandemic levels two years ago, with shopper footfall hit by the rapid rise in Omicron cases.
ABF said shopper numbers and trading had since improved as fears over the variant ease and added that like-for-like sales were higher when compared with a year earlier, when stores were shut due to lockdown measures.
Total group-wide Primark sales were 36% ahead year-on-year at £2.7 billion. Grocery, sugar, agriculture and ingredients revenues in aggregate were 6% ahead of last year at £2.9bn, and group revenues rose 19% to £5.6bn.
ABF said supply chain problems had started to ease , although it is still seeing some delays at ports and with shipments.
READ MORE: Customers flock back to Primark stores
The group said it is offsetting higher costs by cutting store operating costs and overheads.
Primark said it expects sales to be “significantly” higher year-on-year between now and April, with all its stores open.
“It is difficult to predict future trading conditions with certainty, but we have seen an encouraging improvement in footfall in the UK and Ireland as the disruption from Omicron reduces,” the group said.
Analysts raised questions over its website offering and inflationary pressures.
Russ Mould, AJ Bell investment director, said: “The rapid spread of Omicron across the UK in December was a major headwind for Primark given it is reliant on people visiting its shops because it doesn’t have a website where you can buy clothes. Yet it seems to have shrugged this negative factor off, confidently saying that a recovery in footfall to its shops is already being seen after a short period of disruption.
“The forthcoming website overhaul in the UK will showcase its products and let customers check product availability by store. However, there is a question mark whether that will result in significantly greater sales.
“The happy middle ground must be launching a click and collect service.
“It would mean Primark could finally say it sells online, and it still gets people through the door who might continue to buy additional items on impulse when they are collecting their pre-paid order.”
Laura Hoy, equity analyst at Hargreaves Lansdown, also said sales at Primark have yet to make their way to pre-pandemic levels for reasons including Covid and connectivity.
She added: “Inflationary headwinds are an unavoidable storm cloud hanging over just about everyone right now, but we think ABF is well-placed to ride it out. While Primark’s lack of digital presence leaves something to be desired in a global pandemic, we’re impressed by the group’s stock management.”
“The group’s low-cost retail business will appeal to shoppers tightening the purse strings, and improved efficiency across all areas of the business together with price hikes in the grocery business look likely to offset the bulk of the pain for now.”
Shares in ABF closed down 4%, or 89p, at 2,042p.
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