The Irish textile retailer Primark achieved a significant increase in sales in the first half of the 2021/22 financial year. According to an interim report published by the parent company Associated British Foods Plc (ABF) on Monday, the retail chain has not yet reached the comparable level of the pre-crisis year 2019/20.
Based on the figures available, ABF expects Primark’s sales in the 24 weeks to March 4 to exceed the corresponding prior-year level by “well over 60 percent”. The group cited the fewer restrictions as a result of the Covid 19 pandemic as the main reason. In the first half of the current year, the Primark stores were open continuously apart from short periods of closure in Austria and the Netherlands, while in the same period last year they had to remain closed for longer periods due to the lockdowns in Great Britain and the other European markets, explained ABF.
Good margins despite rising raw material prices
Overall, however, the clothing chain’s sales were four percent below the corresponding level of 2019/20, according to the parent company. On a comparable area, they fell by eleven percent compared to the pre-crisis level. Losses in Great Britain (-9 percent) and continental Europe (-14 percent) could not even be remotely offset by like-for-like growth in the USA (+2 percent).
According to the interim report, Primark’s operating margin was around eleven percent in the most recent half-year thanks to the almost continuously open branches. “The impact of raw material price inflation and higher freight costs were largely offset by the favorable US dollar exchange rate development and a reduction in store and staff costs,” said ABF. Although the burden of supply bottlenecks has decreased since the autumn, the group expects a lower operating margin for the second half of the year due to “continued inflationary pressure”.
The clothing chain, which currently has 402 branches, intends to stick to its growth plans: over the next five years, the number of Primark locations is to be increased to 530. In terms of expansion, the “special focus” is on the USA, France, Italy and the Iberian region, explained ABF.