Value fashion giant Primark “traded very well” in the first half, parent company ABF has reported.
Primark’s sales over the period are expected to be ahead 19% year on year at actual exchange rates, reaching £4.2bn, and adjusted operating profit margin for the full year is anticipated to be above 8% – more than previous expectations.
Primark reported that an improved earnings outlook in the second half was “a result of higher sales and some lower operating costs” but warned: “We remain cautious about the resilience of consumer discretionary spending in the face of continuing inflation in the cost of living and higher interest rates.”
First-half trading was “good in all markets, well ahead of expectations, and represents a material improvement in both the UK and Europe on the second half of our last financial year”. The retailer said there had been a “very positive reaction” to its spring and summer ranges.
It said: “We expect Primark total sales to be 16% ahead of the same period last year [at constant currency] driven by like-for-like sales 10% ahead as a result of higher unit volumes and higher average selling prices. Footfall increased strongly in both the UK and in Europe.”
UK trading was “particularly strong” and sales growth for the half year is expected to be up 15%, “driven by an increase in like-for-like sales of 14%”.
Primark’s share of the total UK clothing, footwear and accessories market by value, including online sales, was up from 6.3% last year to 6.8% this year. The retailer said footfall “remains strong in major city centres as well as on high streets and retail parks”.
Primark said: “Looking ahead to the second half, we remain cautious about the resilience of consumer discretionary spending in the face of continuing inflation in the cost of living and higher interest rates.
“Our expectation is that like-for-like sales growth in the second half will be lower than that achieved in the first half but, based on our experience to date, will be better than our previous expectation.
“As a consequence, sales densities will improve compared to the same period in the prior year. Sea freight costs have returned to more normal levels and energy costs are much reduced recently.
“However, the cost of bought-in goods will be higher due to the strength of the US dollar against sterling and the euro and higher wage costs are expected. Taking these factors into account, we now expect full-year margin for Primark to be above 8%.”
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