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Irish Primark saw its profit rise by no less than 25 % in the past six months. The fashion discounter now accounts for two thirds of the profit of parent holding company Associated British Foods, which also distributes sugar and Twinings tea.
Growth thanks to European expansion
Primark’s turnover increased by 4.4 % in the first half of this financial year, to 3.63 billion pounds (4.2 billion euros), after good performances in continental Europe: turnover there increased by 5.3 %, mainly thanks to Belgium, France, Italy and Spain. The fashion retailer struggled in Germany however, and in November there was a decline in the number of visitors everywhere. The chain now looks towards new markets, especially in Central Europe: Ljubljana (Slovenia) will be the first store in the region, with Poland and Czechia to follow.
Sales in the UK market increased by 2.3 %: Primark is more dependent on organic growth there, because it can open fewer new stores in that rather saturated market. Still, the chain did open its largest store ever in Birmingham at the beginning of this month. More than half of the 382 million pounds of capital that ABF spent in the first half of the year went to this store alone. In addition to revenue, margins also improved.
Huge profit growth
The most striking, however, is Primark’s profit growth: operating profit reached 426 million pounds (490 million euros), 25 % more than a year earlier. The fashion chain already accounts for nearly 70 % of all profits at Associated British Foods, which amounted to 639 million pounds (740 million euros). According to CEO George Weston, Primark owed its “excellent profit growth” to “further development of the customer experience and selling space expansion”.
Weston is happy with what he calls “a robust set of results”. Although the profit in the sugar branch has fallen considerably, the CEO expects that its profitability too will improve from now on. In the agriculture branch revenue went up (+ 8 %) while profits crashed almost 40 %, while Ingredients saw a low single digit growth on both accounts.
