As expected, the Irish clothing discounter Primark increased its sales significantly in the first half of the 2022/23 financial year. Demand also recovered in Germany, but the company is planning further branch closures in Germany. This emerges from an interim report published by the parent company Associated British Foods Plc (ABF) on Tuesday.
According to this, Primark’s sales in the 24 weeks ended March 4 were 4.23 billion British pounds (4.78 billion euros), exceeding the corresponding level of the previous year by 19 percent. Adjusted for changes in exchange rates, revenues grew by 17 percent, on a like-for-like basis they increased by ten percent. The operating profit adjusted for special effects shrank due to higher costs by 15 percent to 351 million British pounds (397 million euros), but was above management’s expectations.
In Great Britain and the other European markets, the sales development improved significantly compared to the second half of the previous financial year, so that the original forecasts could be exceeded, the company explained.
Primark announces the end of locations in Gelsenkirchen, Kaiserslautern, Frankfurt and Krefeld
Primark also experienced a “strong recovery” in the German business, which has been in crisis for a long time, and achieved a like-for-like sales increase of 13 percent in the first half of the year. The space productivity in Germany is still “too low” due to the size of some existing locations and the fact that branches are too close to each other, the discounter admitted.
Therefore, the company continues to rely on extensive cuts. As part of the updated reform plans, further German stores are now to be downsized or closed. Specifically, the company announced the end of the branches in Gelsenkirchen, Frankfurt-Nordwestzentrum, Kaiserslautern and Krefeld. During the financial year, Primark had already closed its stores in Weiterstadt and Berlin-Steglitz.
After the store in Hanover was recently downsized, the retailer is also considering reducing the space at other locations. Corresponding decisions are to be announced “in due course”.
In the future, the discounter in this country will rely on smaller branches
At the same time, Primark presented its future plans for Germany. The company is committed to the “German market, where it has a large and loyal customer base,” according to a statement. It is therefore planned to invest in new openings in locations where there is no risk of mutual “cannibalization” of the branches. However, the future stores will be smaller than the previous average size in Germany and their product range will be geared towards local needs.