Debenhams sells Sheffield warehouse to Primark for £90m as Primark to launch home delivery
Debenhams has sold its Sheffield warehouse to Primark for around £90m, as Primark announced that it plans to launch a home delivery service in Great Britain.
It comes as Primark forges forward with its plans to bolster its retail offering.
Primark owner, Associated British Foods (ABF), which also runs large food, sugar and agriculture operations, said it had bought the new warehouse in Sheffield to support the plans.
The company did not specify when home delivery would start but said it would come “in the future” for England, Scotland and Wales.
Located on Shepcote Lane in the Tinsley area of Sheffield, the “highly automated” warehouse has been acquired from the Debenhams Group in a £90m deal, and is not expected to have an impact on people’s jobs.Debenhams Group said the move comes as its turnaround continues “at pace”, and as it transitions to a marketplace-led business model that is “capital-lite, stock-lite, cost-lite and cash generative”.
Dan Finley, group chief executive officer, said: "The Debenhams Group turnaround continues at pace, and this transaction helps accelerate our progress. As a result of the disposal, net debt is now expected to be negligible at our year-end.”
The move from Primark comes as the company also continues its drive to grow its “click and collect” offering for people to make purchases online then collect in stores.
The company recently unveiled price cuts on hundreds of fashion items, which it said had led to positive sales momentum particularly for nightwear, leisure and fitness ranges.
ABF is preparing to separate Primark from its food business and list it on the FTSE 100 as a standalone entity by the end of 2027.
In a trading update to investors, ABF said Primark sales are expected to have dipped by 2.6 per cent over the past financial year, which ends on Saturday, when compared like-for-like with the year before.
The decline has been driven by weaker sales in continental Europe, whereas sales in the UK are estimated to have edged up by 0.6 per cent year-on-year.
Primark sales started the summer season strongly but were then impacted by the prolonged hot weather, which delayed the transition to buying autumn clothing ranges, according to the business.
Trading has improved in the more recent weeks that temperatures have cooled, it said.
ABF’s chief executive George Weston said: “Our priority focus areas, the UK and womenswear, continued to outperform our other markets and categories.
“Primark has made significant progress in building its digital capabilities and will continue this through both growing click & collect and by offering home delivery in Great Britain in the future.”
ABF owns a roster of brands in the grocery sector like Kingsmill, Twinings, Jordans, Patak’s and, following a recent acquisition, Hovis.
It warned that adjusted operating profits for the division are expected to be slightly lower than previous expectations, for the full year, partly because of Twining sales being dampened by the heatwaves reducing demand for hot tea.
It also has a sugar business which has been impacted by higher gas costs linked to the Middle East conflict .
The company is expecting to report an adjusted operating loss for the full year for the division towards the “higher end” of its guidance range of £25m to £6m.
Shares in ABF were down by around ten per cent in early trading on Thursday.