// Primark full year sales up 4.2% to £7.79bn
// However, growth was driven by store expansion scheme as like-for-likes slipped 2%
// Operating profit up 8%
Primark owner Associated British Foods hailed a “resilient” year as it was boosted by the continued expansion of the high street fashion store.
For the financial year ending September 14, overall sales at Primark came in at £7.79 billion – a 4.2 per cent year-on-year uptick at actual exchange rates or 4.1 per cent at constant currency.
AB Foods said the value fashion retailer’s sales growth was driven by its expansion as like-for-like sales slipped two per cent.
Meanwhile, adjusted operating profit grew eight per cent year-on-year to £913 million, with operating profit margin increasing to 11.7 per cent compared to 11.3 per cent last year.
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AB Foods said Primark performed well in the UK, with a “significant gain” in market share and sales growth of 2.5 per cent driven by the opening of four new stores – such as Birmingham High Street, which is now Primark’s biggest store worldwide.
While like-for-like sales in the UK declined one per cent year-on-year, it still outperformed the overall weak market of the clothing, footwear and accessories sector.
Sales in the Eurozone were 4.8 per cent ahead of last year at constant currency, boosted by growth in Spain and France and strong performances in Italy and Belgium.
Over Primark’s year selling space in the Eurozone increased by eight per cent, but like-for-like sales fell by 2.9 per cent thanks to a weak performance in Germany.
AB Foods has since hired a new managing director for its German market to lead a number of initiatives which include targeted local marketing campaigns and the reduction of selling space in some stores.
Excluding Germany, Primark’s like-for-like sales in the Eurozone fell by 1.1 per cent – although AB Foods pointed to an improving trend with positive like-for-like sales in the final quarter.
Over in the US, Primark delivered strong sales growth which, coupled with lower operating costs, resulted in reduced operating loss for the region.
AB Foods said “the positive reception by US consumers to Primark, combined with our profitable store model, gives us confidence for further expansion in the US market”.
Primark is slated to open two new US stores will open in the new financial year, and is in the process of finalising paperwork for an additional two.
Meanwhile, during the second half, Primark’s buying, merchandising, design, sourcing and quality teams, previously located in Reading and Dublin, were consolidated in Dublin.
Looking ahead, AB Foods said the “extremely volatile” sterling exchange rate will affect the cost of goods for Primark’s second half next year.
However, the company said it plans to achieve “significant mitigation” from reduced materials prices, the favourable effect of exchange rates in sourcing countries, better buying and a programme to reduce operating costs.
Looking at AB Foods as a whole – which alongside Primark also includes grocery brands such as Twinings, Billingtons and Kingsmill – adjusted pre-tax profit grew two per cent year-on-year to £1.4 billion.
On the other hand, adjusted operating profit for the full year increased one per cent to £1.42 billion while revenues increased two per cent to £15.8 billion.
However, on a statutory basis pre-tax profits dropped eight per cent to £1.17 billion after it was hit by losses caused by the sale or closure of businesses.
Statutory operating profit also decreased, by five per cent year-on-year, to £1.28 billion.
“The group delivered a resilient performance this year, with strong profit growth from grocery and Primark, which more than offset the profit decline in sugar,” AB Foods chief executive George Weston said.
“We continued to pursue the opportunities to grow our businesses with a gross investment of over £800 million.
“Next year the group is well-positioned for further progress, with the continued expansion of Primark, a material improvement in our sugar profit and strong profit growth in grocery.”