Sales Up at Primark But Profit Disappoints
Primark, the discount fashion and homewares retailer owned by Associated British Foods, reported rising sales for the six months to February but missed profit expectations.
Six Month Sales Up 2%
Group revenue increased 2% to £2.8bn in the six months, driven by strong sales at Primark where like-for-like sales grew 2%. Online sales more than doubled at Primark during the period due to an expansion of its click-and-collect services, which are now available across all Primark stores in the UK.
London Click-and-Collect Rollout
Primark launched a major expansion of its click-and-collect services by launching the option in all of its stores across London. Customers can now order products on Primark’s website and mobile app for delivery to any of its 168 stores in the capital. The rollout in London follows successful trials of the service in other major UK cities.
Pre-Tax Profit Misses Targets
However, AB Foods’ pre-tax profit fell short of analyst expectations, dipping 1% to £402m. The fashion and homeware unit, which houses Primark, saw operating profit decline 4% due to higher costs, offsetting the impact of strong sales growth. Currency movements and higher costs, especially for cotton, also weighed on profit margins.
UK and Europe Drive International Growth
Primark continues to expand internationally and opened 12 new stores during the period, including outlets in Madrid, Amsterdam, and Milan. The UK and Europe are the key drivers of Primark’s international growth, with new stores launching in France, Spain, Belgium, Portugal, and Denmark in the period. More new stores are planned for the US, where Primark currently operates a single store, and Asia following expanding retail opportunites in the regions.
Positive Outlook Despite Uncertain Times
While trading remains unpredictable due to ongoing pandemic uncertainties, AB Foods said Primark’s sales and performance since re-opening stores have been “very encouraging”. The group retains a “positive but cautious” outlook, assuming there are no further significant lockdowns or store closures. Primark is reinforcing its value positioning to attract bargain-hunting customers during the economic crisis.
