ABF said its retail arm – Primark – delivered strong sales across the 24 weeks ending 2 March, driven by newly-opened stores and by last year's selected price increases to offset inflation, as it revealed plans to make Click + Collect available to all UK consumers.
Sales were up 7.5% in the period, following the previously reported sales growth up 7.9% in the 16 weeks to 6 January 2024. While trading was marked by a slow start on the back of unseasonable weather and general trade softness, prolonged cold weather meant average selling prices were higher than expected in the period across cold-weather products with generally good sell-through of stock.
Like-for-like sales growth was 2.1% in the period, driven by higher average selling prices, partially offset by slightly smaller basket sizes and accordingly lower volumes.
Adjusted operating profit margin for the period recovered to 11.3%, significantly higher than the same period last year, reflecting an increase in all countries. This growth in margin was driven by a significant improvement in product gross margin, driven by lower material and freight costs and the annualisation of prior year price increases, partially offset by the impact of foreign exchange.
Regional performance
In the UK, sales grew by 4.3% against the same period last year, driven by like-for-like sales growth of 3.6% and a contribution from new space of 0.7%.
In Europe (excluding the UK), sales grew by 7.9%. New selling space contributed 6.4% to that growth, with like-for-like sales up 1.5%.
Sales growth in the US was 38.4%, driven by new store openings which performed well. Adjusted operating profit improved significantly in the period.
Primark’s digital growth strategy has continued to progress and traffic to websites increased in all markets during the period.
“In most markets, some 20% of visitors now use the stock checker facility and we believe this facility, combined with the other improvements we have made to the websites, provide meaningful support to sales. We continue to invest in search engine optimisation, CRM and paid marketing,” ABF said.
Specific to the group, H1 revenues came in at £9.7bn from £9.5bn a year earlier, operating profit increased to £931m from £663m and net profit rose to £678m from £542m.
Commenting, Clive Black, research analyst at Shore Capital said: “ABF lost some buy-side friends around the pandemic, especially with no online presence in Primark and concerns about capital allocation… We like the balance now, noting that Mr Weston [ABF's chief executive] was somewhat vindicated in not being a busy fool online, whilst positioning the firm, to us, for brighter times ahead and, if the ABF stars do truly align, for considerable potential upside for shareholders.”
Click + Collect expansion
Following Click + Collect trials in select UK cities, which Primark said showed good basket sizes and strong additional attachment store sales, Primark is now expanding the initiative to be UK-wide.
ABF explained: “We believe we have developed a bespoke version of ecommerce that is additive to our store-led model, enhances our overall digital engagement programme and delivers incremental sales. The results give us the confidence to roll out this service across all our stores in England, Wales and Scotland, with a curated product range across womenswear, kids, menswear and a selection of homeware.
Primark will now roll out its Click + Collect programme to all 184 stores across England Scotland and Wales by the end of 2025.
Primark chief executive Paul Marchant said: “Primark will always be committed to offering the very best value and that’s made possible because of our simple and cost-efficient business model centred around our stores. Our trial of Click + Collect over the last 18 months has been about understanding how we can offer our customers greater convenience to shop with us wherever they are, but in a way that complements our business and our stores. We’re now confident that we’ve found a model that can do both and support us with our plans to grow the business. The feedback from our customers has been positive as they really value the convenience our service offers and we’re also seeing it’s reaching new customers too. I am excited to see this expand and give more people more reasons to choose Primark and discover the great value and ranges we have in store.”
The news comes as Primark marks 50 years on the Great British High Street, and invests over £100m in its UK stores this year. Earlier this month (April) Primark announced plans to cut prices across kids holiday essentials.
