The cheap fashion chain Primark announces the closure of four branches in Germany. In addition, several hundred jobs are to be cut and existing shops downsized.
The Irish textile discounter Primark wants to close four stores in Germany and cut 420 jobs. The chain is “overrepresented” in some regions and profitability in the German stores is “at an unacceptable level,” the management wrote to the workforce today. The shops in Gelsenkirchen, Krefeld, Kaiserslautern and in Frankfurt’s north-west center are affected by the realignment. Negotiations will begin with the employee side about the closure plans.
Shops should get smaller
The agreements should be “as socially acceptable as possible”. “We regret it if redundancies become necessary, but the planned adjustment measures are unavoidable,” said the management. Economic efficiency must be guaranteed in order to preserve the other jobs in the long term.
Due to the expansion in recent years, the average size of the German branches is “considerably” larger than in other countries. The company is therefore planning to downsize existing shops. However, no redundancies are planned there.
In addition, Primark wants to test “new store concepts”: They would be smaller than the average stores in Germany and should be “oriented more towards local customer needs”. In addition, the company is examining investment opportunities for new locations, but only in regions where “the risk of cannibalization with existing stores is low”.
Primark owners earn less
Primark currently has a good 4,500 employees and 30 shops in Germany. The chain is owned by conglomerate Associated British Foods (AB Foods), which today reported falling profits. The reason given by the group was increased costs, which were not all passed on to customers.
Operating profit fell three percent to £684 million (€773.3 million), AB Foods said. Revenue rose 21 percent to $9.56 billion. “At Primark, we remain cautious on the resilience of consumer spending amid ongoing cost-of-living inflation and higher interest rates,” the board said. He forecast a like-for-like sales decline for the cheap fashion retailer in the second half of the financial year.