Primark company analysis

Primark carries out its operations in the UK, where it has over 161 stores, France, Germany, Spain, Italy and Ireland among other countries. Primark sources clothes from different countries including Bangladesh, China, India, and Vietnam where the materials, as well as the labor costs, are lower. For the purpose of providing consumers with exactly what they what, Primark works with a variety of manufacturers worldwide and operates around 315 “discount department stores” in the UK, Ireland, and Spain. It basically targets the under 35-year-old, fashion-conscious market and features departments like children wear, women wear, lingerie, menswear, accessories, footwear and also household textiles (Edwards, 2010). Primark is the second biggest fashion retailer in the UK following Marks and Spencer. In the UK, the rise in the cost of cotton highly affected the companies in the fashion industry.

However, just because the cost of cotton was high, the companies in the fashion industry did not raise the prices of their products so they do not lose their customers. Therefore, this meant short-term losses for the companies but attained customer’s loyalty in the long-run. The customers: The customer’s factors affecting the UK fashion retail industry include norms, lifestyle, cultures, population changes, and demographics as well. All these factors differently affect the clothing industry and the companies operating in this industry ought to ensure to provide products and services satisfying the needs of customers in different cultures and following different norms (Suttle, 2018). Due to Brexit, the pound sterling dove to its lowest against the dollar for more than 31 years which had an impact on the UK fashion retail industry (Pratap, 2017).

Social factors: The biggest socio-social patterns that the apparel retailers in the UK confront are the rising obesity and additionally the maturing UK populace. The UK, now named as "fat man of Europe" has around 7 out of 10 British men and furthermore 6 out of 10 ladies who are delegated overweight. The lack of plus size in many of the fashion retail stores makes most of the obese female shopper disappointed, thus the clothing retailers in the industry ought to start investing in plus-size clothes. Social norms also affect the demands of fashion products. 9% market share of the overall fashion retail market value compared with Next which is at 7. However, Marks and Spencer still remain the largest apparel retailer in the UK with a market share of 8.

1% market share (Butler, 2018). In the year 2017, Primark’s sales were at approximately 19% higher than 2016 at actual exchange rates and approximately 12% at constant currency in general, while in the UK sales were higher by 10% in 2017 compared to 2016 (Singh, 2017). The company’s operating profit margin decreased from 11. 79% Therefore, the higher the NP ratio at Next Plc demonstrates that Next plc is more effective in its cost control compared to Primark. It shows that the management and operations of Next plc are better performings compared to those of Primark, despite the continuous improvements at Primark and the increased sales and profits over time. Return on assets (ROA), on the other hand, measures the profitability of an organization in relation to its total assets. It also indicates how well an organization is performing by simply comparing the profit the company is generating to the capital it has invested in its assets.

ROA = (Net Profit/total assets)*100 Primark’s ROA = (735/904. Threats • The likely uncertainty due to the British exist is a threat to Primark • High competition Managerial recommendations The strong performance at Primark bucks the trend in the UK considering the fact that the company does not sell products online. However, the company is missing on the change to offer deliveries home-to-home. Thus, the company could consider introducing online shopping for its products since its websites and social media activity have proven to be successful in tempting shoppers into the company stores (Butler, 2018). Despite the fact that Primark has a higher power in business and high market share compared to most of its competitors, the company has proved to have nearly poor administration quality and low measures of hi-tech position.