Primark ABF boost as profits surge 7pc
Profits at Primark owner Associated British Foods (ABF) soared 22pc to £1.36bn (€1.54bn) during its last financial year as it reaped the benefit from a strong performance by the Dublin-headquartered clothing chain.
Primark is the single biggest division in ABF, whose activities stretch from retail to grocery goods, sugar production and agricultural products. It owns brands such as Ryvita, Twinings, Kingsmill and Blue Dragon.
ABF said that gross adjusted operating profits at Primark rose 7pc to £735m (€834.5m) in the 52 weeks to September 16.
Group revenue was 15pc higher at £15.4bn (€17.5bn), with revenues at Primark, which trades as Penneys in Ireland, rising 12pc at constant exchange rates to £7.05bn (€8bn). Based on actual exchange rates, sales at Primark were up 19pc.
"The expansion of Primark's selling space continued apace this year and trading was excellent, particularly over the summer, delivering strong increases in market share," according to ABF CEO George Weston.
He added that the group did not pass on higher input costs arising from sterling weakness against the dollar to customers.
"The gross impact of this on Primark's margin was, to some extent, mitigated by the work of the buying and merchandising teams and margin declined by less than expected at the beginning of the year to 10.4pc," he added.
ABF said that Primark performed "particularly well" in the UK, where sales were 10pc ahead year-on-year. It added that its total share of the UK clothing market "increased significantly" in the last financial year.
"After a good first half, third quarter trading was strong in the lead-up to Easter, with the growth also benefiting from comparison with prior year results that were affected by poor weather and an earlier Easter holiday," it noted.
"Fourth-quarter trading was equally strong, fully reflecting the success of our consumer offering."
ABF said that Primark sales in mainland Europe were 16pc higher on a constant currency basis. It added that of Primark's top 20 outlets by sales density, 15 are now in continental Europe, including seven in France and Italy.
"The major success of the newly-opened store in Liffey Valley in Dublin demonstrates the opportunity for further selling space expansion in our more established markets," it noted.
ABF has also expanded Primark into the US market, having launched its first outlet there, in Boston, in 2015. I
It has since expanded across the eastern seaboard, opening outlets in states including New York, Pennsylvania and Connecticut.