Following today’s release of Primark’s pre-close figures for the year to 16 September 2023; Louise Deglise-Favre, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “Primark’s total FY2022/23 sales are expected to show growth of 15% on a constant currency basis, helped by the desirability of its value proposition amid challenging economic times. On a like-for-like (L-F-L) basis, sales rose 9% on the year and have only just recovered to around pre-pandemic levels, as L-F-L sales in FY2021/22 were 9% below FY2018/19. Therefore, store expansion is driving most of its growth, and it remains hindered by its lack of significant online operations. In Q4, Primark’s growth was slightly stronger than Q3, with total sales rising 15% and L-F-L’s up 8% (Q3: +13% and +8% respectively), which is encouraging for the year ahead. It also anticipates seeing an improvement in margins in FY2023/24, with FY2022/23 adjusted operating profit margin coming through around 8%, down from 10% in the prior year.
“The retailer performed best in its home market, the UK, with L-F-L sales rising 11%. In continental Europe, L-F-L sales grew 8%, which is a concern considering they were 18% down on pre-pandemic levels last year. Primark needs to continue boosting its consumer awareness in the region to steal market share from dominating local players, such as Kiabi in France and Pepco in Eastern Europe. Primark did not disclose L-F-L performance in the US, indicating the region might be facing difficulties growing sales organically due to the competition from strong value players such as Shein and Walmart. However, total US sales rose 45% in Q4 due to the opening of four new stores.
“Primark invested heavily in its digital operations in FY2022/23, after growth in the online channel caused it to sink further than others throughout the pandemic and hindered the speed of its recovery. The retailer has completed the rollout of its new website to all markets, which remains non-transactional, but showcases an expanded range of products and enables shoppers to check store availability. Primark is also expanding its UK click and collect trial, currently in 57 stores, to include selected womenswear products as well as the childrenswear and nursery items it launched with. This will take Primark’s digital capabilities to a higher level, given the popularity of its womenswear, testing the robustness of its logistics before further extensions.”
