// Primark sales and profits rise despite cost-of-living
// UK like-for-like sales have returned to pre-Covid levels while profits rose 136%
Primark’s UK like-for-like sales have returned to pre-Covid levels as it promises not to increase prices.
The value retailer’s adjusted operating profit soared 136% to £756 million in the year to September 17.
Primark’s total sales also jumped 43% to £7.7 billion year on year, driven by a “significant increase” in footfall and sales densities as shoppers emerged from the pandemic.
Owner Associated British Foods said it expects further cost inflation going forward but vowed not to raise prices more than already planned.
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It said: “Given a context of a likely reduction in consumer disposable income we have decided this year not to implement further price increases on the autumn/winter and spring/summer ranges beyond those already implemented and planned.
“We believe this decision is in the best interests of Primark, supporting our core proposition of everyday affordability and price leadership and supporting market share growth over the longer term.”
UK returns to pre-Covid levels
In the UK, both like-for-likes and market share are now broadly in line with the pandemic. Like-for-likes improved from 10% below pre-Covid levels in the first quarter, to 2% below in the final quarter of the financial year.
However, it experienced weaker like-for-likes in Europe where consumer sentiment was more cautious.
In Germany, Primark said that footfall has not returned to pre-pandemic levels, and it may look to optimise its store estate there going forward.
The retailer expects Primark’s adjusted operating profit margin to be 8% lower next year.
However, it is targetting returning to an adjusted profit margin of 10% when commodity prices moderate and consumer confidence improves.
Associated British Foods CEO George Weston said: “The group delivered strong revenue and profit growth this year in a clear demonstration of the benefits of our diversification, brand strength, and of our commitment to disciplined financing and investment.
“The performance was achieved despite pandemic-induced disruption being followed by high and volatile input cost inflation.
“Sales, margin and profits at Primark increased significantly as more normal customer behaviour resumed after the pandemic. Significant progress was made in building out Primark’s digital capability, which will be a key element in the future development of Primark.
“Looking ahead, substantial and volatile input cost inflation will be the most significant challenge in the new financial year, and our businesses will continue to seek to recover these higher costs in the most appropriate way.”
