Primark posts profit uplift as it plans store expansion programme
Primark has increased its full year adjusted operating profit by 15% to £415 million before the repayment of job retention scheme monies.
However, revenue fell by 5% below the prior year at both actual and constant currency rates after the fashion retailer lost a third of available trading days in the 53 weeks to 18 September due to store closures during Covid-19 lockdowns.
Primark owner Associated British Foods has estimated that lost sales while stores were closed amounted to around £2 billion. When stores were open, full year like-for-like sales were 12% below two years ago.
In the first half of the period, the like-for-like performance reflected lower category spend and reduced footfall due to trading restrictions. When the stores reopened in the third quarter, sales were 3% ahead on a like-for-like basis compared to the same period in 2019.
ABF said trading varied considerably across its estate with the UK impacted by people being required to self-isolate due to contact tracing alerts.
In continental Europe, sales were hindered by a decline in the number of foreign tourists, particularly in Spain and Portugal.
Meanwhile, like-for-like sales in the US were 6% up on the same period two years ago when the retailer’s city centre Boston store was excluded.
In September, Primark launched an expanded Primark Home department at the Merry Hill shopping centre in the West Midlands. Following a “very positive” customer response, ABF will be rolling out the extended range to a total of 40 stores over the coming months.
During the next five years, the retailer is expecting to grow its store estate to 530 shops from 398 at financial year end. This will include a focus on expanding selling space in the US, France, Italy and Iberia.
George Weston, ABF chief executive, said: “Primark delivered a good performance in the face of continued disruption to trading caused by the pandemic. It also unveiled its wide-reaching sustainability strategy with the aim of making more sustainable fashion affordable for all. Although the possibility of further trading restrictions cannot be ruled out, we expect Primark to deliver a much-improved margin and profit next year. We are now intent on expanding our new store pipeline and investing in technology and digital capabilities to continue improving the performance of the business.”
