Associated British Foods (ABF), the parent company of Primark, has released its half-year results, demonstrating a robust recovery for the value-focused fashion retailer in the aftermath of the pandemic. Over the 24-week period to 5 March, the company experienced a 64% rise in sales compared to the same period last year when store closures were enforced due to the pandemic. This recovery is primarily attributed to an increase in foot traffic as stores reopened, resulting in an operating profit margin of 11.7%, which aligns with pre-pandemic levels. Despite inflationary pressures, Primark remains dedicated to maintaining its competitive pricing and affordability for customers, although it will introduce selective price increases on some of its AW22 stock.

In terms of financial figures, Primark achieved a revenue of £3.54 billion during the half-year, marking a 64% increase on a constant currency basis and a 59% increase on a reported basis. Adjusted operating profit experienced a significant upswing, rising by 863% and reaching £414 million. Although like-for-like sales exhibited improvement compared to the fourth quarter of the previous financial year, they continued to remain 10% lower than pre-pandemic levels. Despite the opening of 27 new stores during the period to expand selling space, total sales remained 4% lower than pre-Covid levels.

While Primark witnessed a strong recovery in the UK and Ireland, mainland Europe faced a slower recovery due to extended Covid-19 restrictions and reduced consumer footfall. UK sales were notably higher than the previous year, but still 8% lower compared to levels from two years ago. However, progress has been made in mainland Europe, with sales only 3% lower than the figures from two years ago. The region observed a 14% decline in like-for-like sales, which was offset by a 12% increase in retail selling space. Notably, the company’s US business exhibited substantial growth, with total sales 37% higher compared to two years ago.

Regarding product categories, Primark experienced robust sales in luggage, swimwear, sandals, health & beauty, and homewares. The company received positive feedback from customers regarding its SS22 fashion ranges. Looking ahead, Primark maintains an optimistic outlook and has already committed to purchasing stock for the second half of the year. The company expects a slight reduction in the operating profit margin for the second half, resulting in a full-year margin of approximately 10%.

Primark remains dedicated to its sustainability strategy, with 39% of the clothing sold in the past six months being made from recycled or sustainably sourced materials, a notable increase from the previous year’s 23%. Furthermore, the company has ambitious expansion plans, aiming to reach 530 stores within the next five years. Its growth markets include the US, France, Italy, and Iberia, with new store openings planned for this year. Primark will also enter the new markets of Romania and Slovakia, expanding its presence to a total of 16 markets. Moreover, the company perceives the US as a significant market and has secured leases for six new stores, including locations in upstate New York, New Jersey, and Chicago.

Useful links:
Retail Gazette: Primark Sales Rise 64% as Value Retailer Recovers from Pandemic
Bloomberg: Primark Owner Sees Slower Sales Growth in Germany Market Revival