Primark has posted a surge in sales and operating profits driven by the reopening of its store estate following Covid-enforced closures.
For the 24-week period to March 5, Primark reported a 59% increase in sales year on year to £3.5bn and an 863% jump in adjusted operating profit to £414m.
The fast-fashion giant put the staggering surge in operating profits down to its stores being able to open and trade throughout the period, compared with long stretches of store closures across the UK and Europe over the same time last year.
Two-year like-for-like sales compared with pre-Covid were down 10% and total sales were down 4% despite Primark opening 27 new stores during the period.
The retailer said the emergence of the Omicron coronavirus variant damaged sales in the middle of last year, but UK and Republic of Ireland sales recovered. However, sales in continental Europe are sluggish and footfall remains down.
UK store sales were down 8% on a two-year comparison basis, with shops in retail parks and town centres outperforming cities in terms of footfall. Although footfall has begun to return to city centres as customers go back to the office and are more comfortable socialising.
Primark’s US business reported sales up 37% compared with two years ago, while like-for-like sales were up 1%.
The retailer noted it had seen “strong sales of luggage and holiday essentials” as people return to travel, and a strong recovery in health and beauty products as customers begin socialising again.
Primark’s operating profit margin of 11.7% reflected that its stores traded for the whole period, while increases in raw material and supply chain costs were mainly offset by a favourable US dollar exchange rate and a cut in shop operating costs.
The retailer also delivered an update on its sustainability strategy, with 39% of its clothes now made from recycled materials, compared with 25% the previous year.
Primark said its ongoing supply chain problems were being alleviated, however it was “still experiencing some delays in dispatch at ports of origin and we expect longer shipping times to continue for some time”.
The retailer admitted that it would not be able to combat inflationary pressures through cost saving and would therefore “implement selective price increases” across its autumn and winter ranges.
However, George Weston, the boss of Primark owner Associated British Foods, insisted the value chain remained “committed to ensuring our price leadership and everyday affordability, especially in this environment of greater economic uncertainty”.
- Never miss a story – sign up to Retail Week’s breaking news alerts
No comments yet