- Primark sales 15% ahead of last year thanks to price increases
- UK trial of click and collect rolled out to womenswear
- Primark profits expected to recover next year
- Food businesses doing better than expected
Primark’s Sales Expectations
“Not all retailers are made equal. Primark expects to report a 15% increase in sales for the full year, largely driven by price increases. The group’s savvy model means that starting with bargain prices allows more room to pump up price tags before putting consumers off in this very tough economic climate.
The cost-of-living crisis hasn’t stopped customers from flocking to new stores either, which is a direct contradiction of the fortunes of many other large physical retailers who are closing their doors – not opening new ones. For all this to be possible Primark has to have a laser-like focus on its ranges and make sure it’s offering precisely what people want – there is no room for wasted hanger space. This seems to be being executed near perfectly, and is also being supported by Primark’s digital pivot.
Primark fans will be delighting in the fact that the trial of click and collect is now being rolled out to womenswear. This is a big shift for Primark who have previously shied away from the margin sacrifice it takes to sustain an online offering. This decision is a direct result of consumers’ insistence on convenience offerings since Covid, and this should help keep sales buzzing in a big way as we enter Christmas shopping season.
Financially, the picture’s brighter too, with Primark profits set to be hoisted off the floor by favourable currency moves and a reduction in freight costs – which if coupled with the increased volumes triggered by click and collect, should mean margins receive a makeover.
Of course, Associated British Foods plc (LON:ABF) is so much more than Primark, and the various food businesses are doing very well indeed. This diversification is an enviable asset to have – stellar brands like Twinings help keep things moving regardless of how many Primark dresses are headed to the checkout.”
Article by Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown
