Primark owner Associated British Foods has reported strong results for the year ending September 16, with group revenue up 16% to £19.75 billion and sales at the fashion chain proving to be very solid.
Total adjusted pre-tax profit rose 9% to £1,473 million, while unadjusted pre-tax profit rose up to 25% to £1,340 million.
Most importantly for the fashion sector, Primark was a bright spot within the group (which also specializes in food, as the parent company’s name suggests). Revenue from its retail division – which essentially means Primark globally/Penneys in Ireland – rose 17% to just over £9bn and, in constant currency, revenue was up 15%. Operating profit rose 30% to £717 million, but on an adjusted basis operating profit actually fell 3% to £735 million.
That drop came as the full-year adjusted operating profit margin was 8.2%, down from 9.8% in the previous financial year due to its decision not to fully recover all increases in input costs .
Primark’s revenue rose strongly, beating its previous expectations. This reflected an increase in sales across its markets driven by multiple factors, including “carefully selected price increases to partially offset high and volatile input cost inflation, well-received product ranges and the resulting attractiveness of our offering.” for new and existing clients.
Good footfall, good performance of new stores and the launch of its improved customer website also had a positive impact and strong sales growth spread throughout the year. In the first half it was 17% and, although the second half was particularly difficult for the fashion sector, it managed to increase by 14%.
Comparable sales growth was 8.5% for the year, 10% in the first half (driven by higher average selling prices and higher unit volumes partially offset by smaller basket sizes) and 7% in the second semester.
Cold-weather essentials and other seasonal lines, including its well-received plush velvet leggings, had driven strong sales leading to a record-breaking holiday season, which included a resurgence of women’s party wear, tailored And beauty. Subsequently, sales of beachwear and luggage were “exceptionally strong as customers looked forward to vacations early.” Its summer operations were also good, led by its boho-inspired design trend.
During the year, it expanded the Premium Essentials Edit offering into more stores and sold well. She also continued her successful collaborations in the UK and Europe with Stacey Solomon, Kem Cetinay and Paula Echevarria, as well as launching her first truly international partnership with Rita Ora “whose sales of the first collection have exceeded expectations”.
Sales of licensed products also grew significantly, especially during Christmas, including Disney, Netflix, The Grinch and American sports partners NFL and NBA. Barbie’s summer collection with Mattel was also “very successful.”
As for the weather, it recorded good sales at the beginning of summer with the exception of Iberia “which suffered unusually bad weather in May.” In July, there was very bad weather in the UK and Ireland and heatwaves in southern Europe, followed by warm conditions in August-September, which coincided with the launch of AW23. “Despite these unseasonal conditions, we generally operated well and our core product ranges maintained strong demand and partially offset the inevitable volatility in more fashion- and season-dependent sales,” he said.
Regionally, UK sales rose 11%, driven by like-for-like growth of 10% helped by the new customer website which has now been up and running for over a year. Primark’s market share grew from 6.4% last year to 6.7% this year.
In Europe excluding the UK, sales increased by 18%, with like-for-like growth of 8% despite weather issues. Its retail spaces in all countries generated comparable sales growth, with good results in Iberia, France, Germany, Belgium, the Netherlands and Eastern Europe. Italy continued to operate with high sales densities. During the period it opened 17 stores in the region with good footfall results. The sales density in most of these new stores remains above average and their share of the total fashion market in value increased in both Spain and France.
US growth and digital initiatives
In the US, total net sales increased 24%, driven by spatial expansion. It opened eight new stores, bringing equity to 21 stores, and is on track to meet its U.S. expansion goal of around 60 stores by the end of 2026.
The new locations benefit from its growing knowledge of the American consumer and the retail market in general.
Stores remain its focus, but as mentioned, it has been boosting its digital capability and its “new and improved” website has been rolled out to all 16 markets. This has generated “a positive customer reaction and a strong increase in traffic across all commercial markets, led by the United Kingdom and the Republic of Ireland. Use of the stock check feature ranged widely between 15% and 20% of website sessions in our markets. We are also focusing more on increasing traffic growth to www.primark.com through organic search, CRM and select performance marketing testing and working in close alignment with our already strong social media engagement. “We believe our digital platform is already starting to support a good increase in footfall and is contributing to comparable store sales in our markets.”
It has also focused on its Click + Collect trial, expanding it to an additional 32 stores in London, bringing the total number offering this service to 57 stores, a third of its UK estate, and adding women’s clothing to them. Although it is still a trial, the first results encourage it.
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