Primark owner ABF has guided that its full-year profit should be higher after reporting food and retail sales jumps during the third quarter.
The retail giant said today (26 June) Primark experienced strong consumer demand for its summer ranges. In the last quarter, total sales witnessed a notable 13% increase.
The brand’s fiscal third-quarter was driven by shoppers buying more seasonal clothing and health and beauty products from higher average selling prices.
Primark’s ongoing efforts to enhance its digital footprint have been successful, the retailer said, with the continued rollout of its improved website. This was recently launched in Germany, Spain, Italy, and the US, with France set to follow shortly after the reporting period. Primark plans to expand this digital deployment to other markets throughout the summer
The retailer opened four new stores in Venice, Italy; Walden Galleria in Buffalo, NY; Toledo, Spain; and Bratislava, Slovakia. The store in Bratislava marks Primark’s entry into its 16th market. Furthermore, Primark has secured a lease for its inaugural store in Texas, boosting its presence in the US market.
Meanwhile, like-for-like retail sales were up 7%, as the company boosted volumes and benefitted from higher selling prices on the back of high inflation.
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Despite the impact of high inflation on consumers’ spending power, European shoppers appear to be surpassing expectations by maintaining their purchasing momentum.
In a recent announcement, fashion retailer Next revealed that its sales and profit projections for the year have been revised upwards, attributing the positive performance to favourable weather conditions and an increase in consumers’ wages.
Similarly, Inditex, the parent company of Zara, reported a robust start to the summer season with growth in physical stores and online platforms .
Apparel analyst comments on Primark’s performance
Louise Deglise-Favre, apparel analyst at GlobalData, a leading data and analytics company, offers her view:
“Primark’s total sales rose 13% on a constant currency basis in its Q3 FY2022/23, confirming that the retailer’s proposition remains appealing despite the macroeconomic difficulties. However, growth slowed slightly compared to H1 when sales rose 17% on a constant currency basis, indicating that demand may finally be slowing down as consumers continue to feel the pressure of inflation on their budgets. While Primark credits higher selling prices for its success, it will have experienced good volume growth as it vowed in November 2022 not to raise its prices again until Autumn 2023. Primark’s positive performance can be attributed to its low prices and fashionable product ranges, making it a retailer of choice for consumers on a budget. Primark also stated that sales of health & beauty products were “particularly strong”, highlighting that its value proposition appeals beyond clothing categories as consumers continue to feel the pinch of inflation.
“The retailer performed similarly in the UK and Europe, with like-for-like sales rising 6% and 7% respectively, due to its strong seasonal ranges resonating well with consumers in preparation for summer. Primark’s ranges have catered to all major fashion trends expected this summer, and its upcoming collaboration with Mattel for the release of the Barbie movie is expected to be a success given the social media buzz surrounding the signature pink aesthetic of the film.
“While Primark failed to mention its performance in the US, the trend from H1 is likely to have continued, with growth driven almost entirely by store expansion rather than demand, with the retailer opening a store in New York state in Q3. The US is a highly competitive market, where online fast fashion retailer Shein has established itself as an additional competitor to well-established retailers like Target and Walmart, making it more difficult for new players to gain market share.
“Primark has rolled out its improved website format in Italy, Spain, the US, and France, allowing consumers to browse a wider variety of products and have a live view of stock levels by store. The websites remain non-transactional, and although this is outdated, it does not seem to be hindering Primark’s performance as consumers have flocked back to stores, eager to engage in the instore shopping experience.”