Primark owner Associated British Foods (ABF) has reported a slight dip in its adjusted operating profit as the retail and grocery giant felt the pain of soaring inflation and a tough economic climate.
For the 24 weeks to 4 March, the group’s adjusted operating profit came in three per cent lower at £684m, compared to £706m in the same period last year.
However, the fast fashion and sugar producer said that group revenues grew 17 per cent to £9.6bn up from £7.8bn in 2022, largely due to Primark’s affordable pricing options which drew consumers in.
As consumers have been forced to favour cheaper clothing options, Primark’s revenues also grew 17 per cent during the period, with revenue up £4.2bn from £3.5bn in last years results.
ABF added that like-for-like sales were also 10 per cent ahead of last year, driven by “higher average selling prices and higher unit volumes”. Its trial of click-and-collect clothing in 25 stores across the UK also helped drive sales.
Primark sales higher than expected
George Weston, chief executive of Associated British Foods, said: “This period was marked by extreme and volatile inflation in all our businesses. We have taken considerable action to mitigate these costs through operational cost savings and, where appropriate, pricing.
“The performance of our food businesses was resilient in aggregate, underpinned by an exceptional performance at ingredients. We were very pleased with the improvement in Primark sales, which recovered strongly from the second half of the last financial year and drove operating profit margin up to 8.3 per cent, higher than we had expected.”
He added: “Primark has been very successful in this period in attracting new customers with its proposition of good quality merchandise combined with price leadership and well invested stores.
“We have had a very strong contribution from new stores opened in the period, and today we are announcing plans for the development of our Primark business in southern states of the US.”