AB Foods-owned Primark posts increased profit margins

Primark sales were up 7.5 percent for the 24 weeks to March 2, 2024 marked by a slow start for many cold weather categories due to unseasonal warm weather, followed by strong Christmas trading with seasonal ranges selling through well.

However, the company, part of the diversified Associated British Foods (ABF), said in a release that adjusted operating profit improved 46 percent to 508 million pounds with margin recovery to 11.3 percent, significantly higher than the same period last year, reflecting an increase in all countries. ABF announced significant increase in interim dividend, to 20.7p, reflecting growth in earnings.

The company added that sales of womenswear and menswear were strong, particularly in performance wear, leisure, knitwear as well as Rita Ora collection. In the 8 weeks period, sales increased by 6.3 percent.

Sales of home were also strong, but cold and wet weather slowed sales of luggage, beach and swimwear. Overall, new stores contributed 5.4 percent of sales growth, due to both increased selling space and higher sales densities. Like-for-like sales growth was 2.1 percent in the period.

In the UK, sales grew by 4.3 percent, driven by like-for-like sales growth of 3.6 percent and a contribution from new space of 0.7 percent. In Europe excluding the UK, sales grew by 7.9 percent. New selling space contributed 6.4 percent to that growth, with like-for-like sales up 1.5 percent. Sales growth in the US was 38.4 percent, driven by new store openings which performed well.

Primark opened three new stores in the period including Woodfield Mall in Chicago, Smith Haven Long Island, and Charlotte North Carolina. The company also opened a new distribution centre in Jacksonville, Florida, to serve expansion in southern states and at the same time, announced lease agreements for stores in Tennessee, Maryland and Texas.

On March 2, 2024, Primark operated 440 stores. Nine new stores opened in the period: three in the US, three in France, two in Spain, and one in Poland. One store in Germany was closed in the period and seven stores are now right sized. Four stores in the Netherlands were also right-sized in the period. Towards the end of the period Primark opened a store at La Vaguada in Madrid, the first of four openings in the city this year. Primark will open its first store in Hungary in the second half of the financial year and continues to target 530 stores by the end of 2026.