The Irish textile discounter Primark was able to increase its sales surprisingly strongly in the first half of the 2022/23 financial year. Due to the recent easing of cost pressure, the retailer now also expects a higher margin. This emerges from an interim report published by the parent company Associated British Foods Plc (ABF) on Monday.
Not least thanks to a successful Christmas business, Primark’s revenues in the first half of the year, which ends in mid-March, are expected to have risen by 19 percent to 4.2 billion British pounds (4.8 billion euros), according to ABF. Adjusted for currency effects, the retail chain’s revenues were 16 percent above the corresponding level of the previous year.
Primark has done good business in all markets and clearly exceeded expectations, the company said. The main reason was a strong increase in customer frequencies in the branches in Great Britain and in the rest of Europe. On a like-for-like basis, revenues increased by a total of ten percent.
The parent company ABF expects cost pressure to ease
In view of the surprisingly high sales growth, the management is now anticipating an operating margin of more than eight percent for the first half of the year, adjusted for special effects. In the same period last year it was 11.7 percent, but since then cost increases due to the strong US dollar, higher transport prices and general inflation in energy and personnel expenses had weighed on the result.
For the second half of the year, the textile retailer expects lower sales growth on a like-for-like basis than in the past few months, but still expects to be able to exceed previous expectations.
In addition, the group’s management now assumes that Primark’s operating margin, adjusted for special effects, will also be over eight percent for the full financial year. As justification, the company referred to more favorable framework conditions: freight costs had “returned to a more normal level” and energy prices had recently “dropped sharply”, explained ABF.
The group intends to publish detailed results for the first half of the year on April 25th.