Irish fashion chain Primark has had a very strong end-of-year period. In terms of sales, 2023 is also starting better than expected, but profits are still lagging.
Discount thrives
AB Foods, the British holding that owns Primark, posted a 16 % sales growth (excluding exchange rate fluctuations) in the sixteen weeks ending 7 January. Including the food business of the holding company (which is also a major player in sugar and food), total sales reached 6.7 billion pounds (7.6 billion euros).
Consumer spending was more resilient than originally expected at Primark: even though Britons were more frugal last December than any other time in the past 25 years, cheaper brands and retailers were able to benefit and did better than anticipated. At Primark, sales rose 15 %.
Pressure mounts
The new year also got off to an encouraging start in all markets, although the group warns that macroeconomic pressure continues to grow. As such, consumer spending could still come under pressure in the coming months. Earnings figures also need more time to recover: AB Foods is still experiencing significant cost pressures, although inflation has become less volatile and some raw material costs have recently fallen.
For the full 2022-23 financial year, the Primark owner maintains its revenue expectations of double-digit growth, but adjusted operating profit will be lower than a year ago. Last financial year, AB Foods still achieved an operating profit of 1.44 billion pounds.
