Primark posts festive sales gains but lags pre-pandemic levels

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Primark has registered a spike in sales during the crucial Christmas trading period but lagged behind pre-pandemic levels.

Primark escalator

Primark said total sales during the period fell 5% compared with pre-pandemic levels

The value fashion giant posted a 36% jump in sales year on year during the 16 weeks to January 8. However, Primark was hit by widespread store closures across the UK and Europe during the comparable period a year ago amid a rise in Covid-19 cases.

Compared with pre-pandemic levels, Primark said total sales during the period fell 5% while like-for-likes dropped 11%.

In its core UK business, like-for-like sales were 10% down on pre-pandemic levels. Stores in retail parks were the only destinations to achieve growth on a two-year basis.

Primark owner Associated British Foods (ABF) said sales in the UK were “well ahead” year on year. It said trading had been impacted by a decline in footfall following a rise in Omicron cases, but it had improved “in recent weeks”.

However, it warned of potential job losses after revealing plans to “simplify our in-store UK retail management structure”.

ABF said this was part of an “ongoing programme to improve the efficiency of our store retail operations”.

Primark highlighted its US business as “the standout performer”, delivering 4% like-for-like growth compared with pre-pandemic levels. Total sales across the pond jumped 37% on a two-year basis.

In its European division, like-for-like sales fell 14% on a two-year basis, but total sales fell at the slower rate of 2% following new store openings.

Primark estimates it lost £30m in sales following periods of store closures in the Netherlands and Austria in the run-up to Christmas.

Despite such headwinds, ABF said operating profit margin at Primark was “ahead of our expectations”. At the half-year mark, profit margin is expected to exceed 10%.

ABF said that reflected “a recovery in sales densities” compared with the same period a year ago.

The business conceded that it was “difficult to predict future trading conditions” but said sales between now and April would be “significantly better” year on year.

It cautioned, however, that supply chain disruption and longer shipping times would “continue for some time”.