Primark predicts £7.7bn in sales for FY22

Associated British Foods, the owner of Primark, has issued a trading update prior to entering the close period for its full year results for the year ending 17 September 2022. The company expects total sales at Primark to be some £7.7bn, 40% ahead of reported sales last year.

The company attributed the much higher revenues to the consumers response to the end of COVID-related restrictions and the resumption of "more normal" shopping behaviour.

Associated British Foods also reported the following data:

• UK like-for-like sales improved in the fourth quarter to achieve close to pre-COVID levels
• Continental Europe like-for-like sales weaker than expected in the fourth quarter
• Expected full year operating profit margin of 9.6% with second half operating profit margin of 8.0%
• Click and Collect trial on track for UK regional launch in run-up to Christmas

The continued improvement in the UK market was offset by a weaker than expected performance in Continental Europe, with like-for-like sales for the quarter are expected to be 9% below the comparable pre-COVID period.

Final quarter trading in the UK was strong, with sales densities improving on the third quarter driven by like-for-like sales 13% ahead of last year and just below pre-COVID levels three years ago. This improvement was driven by higher customer footfall across the estate and, in particular, by customers returning to high streets and city centres.

Primark's share of the total UK clothing, footwear and accessories market by value, which includes online sales, for the 12 weeks ending 24 July was broadly in line with pre-COVID levels three years ago. ]

To date, Primark's retail selling space in the financial year increased by a net 0.4 million sq ft. Since the last trading update, it has opened two stores in Italy: Chieti and Bologna. Primark will open a further three stores before the financial year end: Brno in Czechia; Tallaght in the Republic of Ireland; and San Sebastián in Spain. As a result, the company will be trading from 17.3 million sq ft of retail selling space at the end of the financial year, a net increase of 0.5 million sq ft compared to a year ago.

The company also reported that its new stock-checker website is being "enthusiastically adopted". Primark said it "remains on track to launch the UK trial of a Click & Collect service in the run-up to Christmas", focusing on 25 stores in the north of England and Wales.

Looking ahead to the next financial year, the company expect sales growth to be driven by the increase in retail selling space and like-for-like growth resulting from both the price increases implemented for autumn/winter this year and those planned for spring/summer next year.