Following today’s release of Primark’s figures for the 24 weeks to 4 March 2023; Louise Deglise-Favre, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “Primark achieved a sales growth of 19.4% in H1 FY2022/23 to 4 March 2023, following a rise of 17.7% for the 16 weeks to 7 January, showing that the retailer has not yet experienced much of a slowdown in demand in 2023. Despite higher average selling prices, after the price increases it implemented in September 2022, Primark still saw a rise in volumes, as it still remains one of the most affordable retailers on the high street and therefore resonates with consumers who are looking to save on apparel purchases due to higher living costs. However, it remains cautious in its full year guidance, expecting sales to slow in the second half. Its profit margin dropped to 8.3% in H1 from 11.7% last year, due to higher production and energy costs, as well as weak exchange rates, and Primark expects this to remain stable in H2.
“Primark’s home market of the UK performed strongly, with sales rising 15%, as it appealed to consumers looking to trade down from their usual mass market brands. In Europe, it registered an 18% sales increase, though this was mainly driven by store expansion, with a 6% increase in selling space, including its first openings in Romania and Southern Italy. Europe’s like-for-like sales only grew 8%, likely due to struggling to compete with other local value players like Kiabi in France and New Yorker in Germany due to the retailer’s minimal advertising, limiting the brand in capturing new consumers. However, Primark is finally addressing the underperformance it has been experiencing in Germany for some time, by embarking on a reorganization of its store portfolio to improve sales densities and better distribute its coverage across the country. In the US, performance remained more muted than in the UK and Europe at 11% despite three new store openings, as it was up against strong comparatives and the retailer faces stiff competition from other value players such as Walmart and Target.
“While Primark rolled out its improved website to Germany and Spain during the period and plans to expand it to all other markets throughout the summer, consumers will likely be disappointed that it is still not transactional. Following the “encouraging results” of its click & collect trial, which it launched for children’s products in 25 stores in the North West in November 2022, Primark has decided to extend the trial to 32 more stores located in and around London. While this proves that Primark is open to exploring online retailing further, keeping the trial to only its children’s range will limit its appeal, and it needs to assess how adult ranges are received online to fully judge its performance.”
