Although it is a tough year for the fashion sector, Primark recorded a 17 % sales growth. The fashion retailer limited price increases, and is slowly increasing its online activities – to which customers flock.
Dip in profit margin
At current exchange rates, the fashion chain’s sales rose to over 9 billion pounds (10 billion euros). The chain has implemented “selective price increases” at the beginning of the year, but decided not to fully pass on the increased costs for a whole range of products. CEO George Weston parent company ABF admitted that consumer demand remains uncertain, but claimed that Primark is in a better position than ever before.
Results were better than expected for the fast-fashion giant, especially as operating profit also rose sharply. Operating profit rose 30 % to 717 million pounds (820 million euros), but did fall 3 % on an adjusted basis as the profit margin was also lower at 8.2 %. A year earlier, the profit margin was 9.8 %, but Weston is confident it will return to above 10 % next year.
More people visited Primark stores, while the chain also opened 27 new shops throughout the year. Weston says the also improved online proposition is working: in the United Kingdom, the chain is rolling out click&collect, while other countries got a new website this year, offering customers the option to explore the range and see which shops stock their product. The digital platform is attracting new customers, the CEO said. “With Primark’s margin returning to its historic levels, we look to the future of the business with confidence.”