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| Primark profits surge 30% after ‘magnificent year’ | Primark profits surge 30% after ‘magnificent year’ |
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| Primark enjoyed a “magnificent year” with profits racing ahead by 30% as it expands its cheap fashion retail empire abroad. | Primark enjoyed a “magnificent year” with profits racing ahead by 30% as it expands its cheap fashion retail empire abroad. |
| The retailer’s relentless growth was not even dented by this autumn’s unseasonably warm weather, which has hurt high street rivals as shoppers delay buying jumpers, jackets and coats. Last week, Next, one of the UK’s most successful retailers, and SuperGroup were forced to issue profits warnings, as sales dipped in the warmth of a prolonged Indian summer. Sales at Primark were up 10% in the six weeks from mid-September, following the end of its financial year. | The retailer’s relentless growth was not even dented by this autumn’s unseasonably warm weather, which has hurt high street rivals as shoppers delay buying jumpers, jackets and coats. Last week, Next, one of the UK’s most successful retailers, and SuperGroup were forced to issue profits warnings, as sales dipped in the warmth of a prolonged Indian summer. Sales at Primark were up 10% in the six weeks from mid-September, following the end of its financial year. |
| George Weston, chief executive of Primark’s parent company, Associated British Foods (ABF), said he was not concerned about the weather, adding that the retailer had not delayed or cancelled any orders. | George Weston, chief executive of Primark’s parent company, Associated British Foods (ABF), said he was not concerned about the weather, adding that the retailer had not delayed or cancelled any orders. |
| Primark’s annual sales are close to £5bn, having risen 17% in the year ending 17 September, mostly as a result of the addition of 1.4m sq ft of shopping space by expanding abroad. Operating profits soared to £662m, a 30% rise. Excluding new stores, sales were up 4% on last year. | Primark’s annual sales are close to £5bn, having risen 17% in the year ending 17 September, mostly as a result of the addition of 1.4m sq ft of shopping space by expanding abroad. Operating profits soared to £662m, a 30% rise. Excluding new stores, sales were up 4% on last year. |
| The retail chain opened its first stores in France last year, with three in the Paris suburbs as well as one in Marseille and another in Dijon. | The retail chain opened its first stores in France last year, with three in the Paris suburbs as well as one in Marseille and another in Dijon. |
| The fashion retailer, which operates in nine countries, plans to open its first store in the US, with the first outlet, in central Boston, due to open at the end of 2015. | The fashion retailer, which operates in nine countries, plans to open its first store in the US, with the first outlet, in central Boston, due to open at the end of 2015. |
| Primark’s heady pace of expansion has bolstered ABF, which is grappling with lower sugar prices that have reduced profits in a core part of its business. Earnings from sugar fell 22% to £2.01bn last year, slashing profits by 54% to £189m. World sugar prices are falling amid more competition in Europe as quotas are phased out. | Primark’s heady pace of expansion has bolstered ABF, which is grappling with lower sugar prices that have reduced profits in a core part of its business. Earnings from sugar fell 22% to £2.01bn last year, slashing profits by 54% to £189m. World sugar prices are falling amid more competition in Europe as quotas are phased out. |
| The strong pound also weighed on ABF’s earnings and profits. The group reported revenues of £12.9bn for its last financial year, 3% down in real terms, although up 1% when based on the average exchange rate. Basic earnings per share rose 30% to 96.5 pence and pretax profits were up 18% to £1.02bn. | The strong pound also weighed on ABF’s earnings and profits. The group reported revenues of £12.9bn for its last financial year, 3% down in real terms, although up 1% when based on the average exchange rate. Basic earnings per share rose 30% to 96.5 pence and pretax profits were up 18% to £1.02bn. |
| Weston said all parts of its business – which spans groceries, agriculture, ingredients and retail – had outperformed last year. “Primark’s trading success and significant expansion delivered another magnificent year,” he added. | Weston said all parts of its business – which spans groceries, agriculture, ingredients and retail – had outperformed last year. “Primark’s trading success and significant expansion delivered another magnificent year,” he added. |
| Retail analysts said Primark’s performance was especially impressive, as the retailer defies conventional wisdom by not offering online shopping, focusing instead on bricks-and-mortar stores. | Retail analysts said Primark’s performance was especially impressive, as the retailer defies conventional wisdom by not offering online shopping, focusing instead on bricks-and-mortar stores. |
| “With no digital channels to speak of, strategically spread physical representation remains absolutely essential,” said Anusha Couttigane, senior consultant at Conlumino. She believes that changing perceptions have also helped. | |
| “Shopping at Primark is no longer something to be whispered about,” she said. “Improved perceptions of its quality and fashionability have helped Primark to break through the fashion snobbery.” | “Shopping at Primark is no longer something to be whispered about,” she said. “Improved perceptions of its quality and fashionability have helped Primark to break through the fashion snobbery.” |
| But Emily Smith at marketing consultancy Added Value, suggested the brand had not shed its disposable fashion image. “Primark’s success has been fuelled by expansion. They have been successful with their offer of variety and inexpensive prices. But how long can this last? As people tire of disposable fashion and worry about the ethics of the manufacturing, the Primark offer becomes less appealing.” | But Emily Smith at marketing consultancy Added Value, suggested the brand had not shed its disposable fashion image. “Primark’s success has been fuelled by expansion. They have been successful with their offer of variety and inexpensive prices. But how long can this last? As people tire of disposable fashion and worry about the ethics of the manufacturing, the Primark offer becomes less appealing.” |