Primark has hiked its profit forecast for the full year after the easing of lockdown restrictions drove a sharp rise in sales for the third quarter.
Parent company Associated British Foods (ABF) said profit at the budget fashion chain would be roughly in line with last year — up from previous guidance of “somewhat lower”.
It came as ABF reported revenue of £3.6bn in the three months to 19 June, up 47 per cent on the same period last year.
This was spurred on by a surge in sales at Primark, which rose almost threefold to hit £1.6bn.
While the sharp growth reflected lockdown closures last year, the company said trading was ahead of expectations thanks to pent-up demand.
Primark sales were up three per cent compared to the pre-Covid period two years ago, though the retailer warned of continued volatility and said performance varied significantly by region.
For the year to date, ABF revenue dipped two per cent to £9.9bn, while Primark sales were 11 per cent lower at £3.8bn.
Shares in ABF rose more than 3.5 per cent shortly after markets opened.
The company also said it was making progress reducing its inventory, which rose to roughly £400m higher than normal levels during lockdown last year.
It said it expected to return to more normal levels of inventory by the end of the financial year, assuming all stores continued to trade.
Primark added that it will pay all money borrowed through furlough schemes across Europe by the end of the year, and revised its total amount due down to £96m from £121m.
In grocery — ABF’s second largest business division — sales were down three per cent in the third quarter due to lockdown stockpiling in the same period last year.
ABF expects this division, which includes Twinings Ovaltine and AB World Foods, to pull in greater revenue for the full year but warned of a single mid-digit percentage decline in operating profit.
The group’s sugar business grew 21 per cent in the quarter, which it said was due to strong volumes in Illovo and China, as well as by higher prices in Europe and Africa.
Richard Hunter, head of markets at Interactive Investor, said: “Primark is back with a bang after restrictions were eased and has taken over the heavy lifting which other parts of the group had assumed during the various lockdowns.
“With revenues rising by 207 per cent versus the previous year and now accounting for around 40 per cent of the group total, this is an important return to form. In addition, there is still more to go for, with tourism travel and opening hours restrictions still in place.”