Primark’s same-store sales rose for the first time since 2017 in its most recent trading period, as it warned of a small decline in the UK that was offset by growth in the US and a “notable improvement” in Germany.
Across the whole of Primark, sales were up 4.5 per cent at constant exchange rates in the 16 weeks ending January 4, although this was “almost entirely” due to new space.
UK same-store sales fell slightly, though total revenue increased 4 per cent driven by new openings, outpacing high street rivals.
“We’re already the number one in the UK market. I think these numbers show that our trading performance has improved. I’m thrilled with that,” John Bason, finance director at Primark’s parent company Associated British Foods, told the Financial Times after the conglomerate’s trading update on Thursday.
The company declined to provide a figure for the same-store sales decline, but did not dispute analysts’ estimates of a 0.5 per cent fall in the UK. That compared with a drop of roughly 1 per cent in the total UK clothing market over a similar timeframe, as measured by Kantar.
“The like-for-like performance in this period is an improvement on what we achieved in the last financial year,” added Mr Bason. He said that December was a strong month for Primark, in contrast to others such as Superdry and John Lewis, which reported weak trading between Black Friday and Christmas.
“The week before [Christmas] we were slightly down year on year but it all got blown away by the most fantastic Monday before Christmas.”
The UK is still Primark’s most important market, with its 189 stores accounting for almost half its £7.8bn in annual sales.
A management overhaul in Germany, where consumers have given Primark a cool reception, has resulted in better trading. “It’s still down in like-for-like terms but way better than this time last year,” said Mr Bason.
“We have changed the way that Primark is running its business in Germany. There is a German operating board and managing director,” he added. Last year, Primark poached Christiane Wiggers-Voellm from rival H&M to head its German operation.
Analysts have previously estimated that difficult trading in Germany, where the retailer has 30 stores, has reduced Primark’s same-store sales by about a percentage point.
“The best demonstration is a big reduction in level of markdown; we are selling much more at full price and the stores are looking better,” said Mr Bason.
Revenue in the eurozone was up 5.1 per cent “as a result of the increase in selling space and like-for-like growth” while the US business, which has also encountered teething troubles in the past, “delivered like-for-like sales growth in the period”.
Primark is now ABF’s most significant business, with analysts at Barclays expecting the chain to deliver £1bn in profit for the first time this financial year — about two-thirds of the forecast group total.
In the conglomerate’s other divisions, sugar revenue was 7 per cent ahead of last year at constant currencies, with increased EU sugar prices in particular set to drive “a material improvement” in the group’s sugar profits this year.
The company’s operations in Spain and China will deliver substantially better results, it said, although domestic sales at South African venture Illovo were affected by lower consumption and increased imports.
Sales at the grocery business, whose products include Twinings teas and Dorset Cereals, were unchanged although margins improved.
Shares in ABF, which is controlled by the Weston family, were about 2.5 per cent higher in early London trading at £26.21.
