Primark sales jump as prices rise and city centre shopping booms
Primark has seen a surge in sales after prices went up and shoppers flocked to city centres, according to owner Associated British Foods (ABF).
Sales at the value fashion retailer in the UK jumped by 15% in the six months to early March, compared with the same period a year ago.
Across Primark, which includes shops in countries around Europe, sales rose by nearly a fifth to £4.2 billion, beating the group’s expectations for the period.
More shoppers returned to high streets and retail parks, and business boomed at city centre stores amid a resurgence in office workers and tourists, ABF said.
Shops also attracted new customers as people hunted down more affordable items amid soaring living costs, leading to an increase in the volume of sales. But average selling prices went up as the business tried to offset some of the impact of cost inflation.
ABF added that it is “cautious about the resilience of consumer spending in the face of ongoing inflation in the cost of living and higher interest rates” so had chosen to put through only “moderate” price increases for this financial year.
As a result of the “careful” pricing decisions, higher selling prices did not fully offset the impact of cost inflation over the period and the group’s margins declined.
The company, which also owns major grocery, sugar, and ingredients businesses, saw its adjusted profit before tax slip by 3% to £684 million.
It expects its full-year profits to be broadly in line with the previous financial year as sales growth moderates and its costs go up, such as for higher staff wages.
George Weston, CEO of Associated British Foods, said: “This period was marked by extreme and volatile inflation in all our businesses. We have taken considerable action to mitigate these costs through operational cost savings and, where appropriate, pricing.
“We were very pleased with the improvement in Primark sales, which recovered strongly from the second half of the last financial year and drove operating profit margin up to 8.3%, higher than we had expected.
“Primark has been very successful in this period in attracting new customers with its proposition of good quality merchandise combined with price leadership and well invested stores. We have had a very strong contribution from new stores opened in the period, and today we are announcing plans for the development of our Primark business in southern states of the US.”
