Higher Prices Provide Q3 Sales Boost at Primark
Primark parent Associated British Foods (ABF) raised profit expectations for the year as third quarter results point to consumer resiliency amid high inflation.
Primark’s summer fashion assortment is starting the season, according to the conglomerate. For the third quarter ended May 27, sales grew by 13 percent to nearly 2 billion pounds ($2.54 billion), while comparable sales improved 7 percent, “supported by higher average selling prices,” the company said. Like-for-like sales growth in the quarter was 6 percent in the U.K. and 7 percent in the rest of Europe.
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Health, beauty products, seasonal apparel and accessories all sold well, according to ABF. Primark now has websites supporting Germany, Spain, Italy and the U.S. The site in France was launched at the start of the fourth quarter.
ABF said it will open four stores opened in the quarter in Venice, Italy; Walden Galleria in Buffalo, N.Y.; Toledo, Spain; and Bratislava, Slovakia, representing Primark’s first store in the country and its 16th market. Primark has signed a lease for its first store in Texas.
In its food business, ABF said third quarter sales rose 18 percent to 2.73 billion pounds ($3.47 billion). Including Primark’s results, total group sales rose 16 percent to 4.726 billion pounds ($6.01 billion). The value chain accounts for 40 percent of total company revenues. Given current results and trading conditions, ABF said it now expects adjusted operating profit for the full year to be “moderately ahead of last year.”
Primark raised prices last year to deal with its own higher operating costs. ABF said at the start of 2022 that it would try to support customers by keeping prices the same instead of charging more. Inflation in the U.K. remained at a high of 8.7 percent in May, leading the Bank of England to raise interest rates by 0.5 percent to 5 percent last Thursday. The 13th consecutive rate hike by U.K.’s central bank is now raising fears of a recession.
