In its pre-close trading update, the group said Primark sales for the 24 weeks to 5 March were expected to be “well over” 60% ahead of last year, as its stores have been able to trade for the majority of the period.
John Bason, CFO at Primark’s parent company Associated British Foods (ABF), told Drapers that despite inflation remaining at a 30-year high, the value retailer has no plans to push up retail prices: “Primark has just started selling spring/summer 22 stock. There are no plans to increase prices this season and we did not increase any of our retail prices last year.”
He explained: “We have seen cost increases in commodities including cotton, sea freight, and energy [costs when running] our stores. This has given us a clear view of two major mitigating factors. One is the natural attrition of store staff. We have let [the number of in-store staff] decline [by not replacing staff that have decided to leave]. [As a result], operating costs have declined.
“Secondly, we buy a lot of clothing in US dollars and then convert them into sterling [which has been beneficial because of the “favourable” exchange rate].”
Bason also said that as sales increase at Primark the value retail chain will be able to use this to help offset any inflationary pressures: “In terms of operational leverage, as we record mores sales we can increase our margins [which helps us to mitigate these operational challenges].
“Everyday routines have come back or are coming back [for our shoppers]. People are back working in the office so formalwear [sales are] strong. People are planning holidays so we have experienced an increase in sales of luggage, beachwear and swimwear across our UK stores.”
However, he detailed that big cities are still suffering from a lack of international tourists: “International tourism still has to come back in a big way. Stores including Amsterdam, Berlin, Oxford Street and Madrid are still down on pre-Covid levels. These stores are missing the strong footfall [they would normally get] from international travellers.”
Last week, prime minister Boris Johnson confirmed the end of remain Covid restrictions in England. Later that week Scotland’s first minister Nicola Sturgeon announced her framework for easing Covid restrictions which began today (28 February).
