Still, with its “accelerated programme of store openings” that puts it on track to add 1 million sq ft of retail selling space this financial year, it has plenty of growth potential. Primark doesn’t sell online so it’s well positioned to take advantage of huge demand in areas that have no branch nearby at present.

CITY CENTRE FOOTFALL RECOVERS

Looking at the latest quarter in more detail, footfall was strong in both the UK and eurozone and unit volumes increased in the 16 weeks to 7 January. Sales were 18% ahead at actual exchange rates and 15% ahead currency-neutral. That’s no surprise given that in the previous year, the omicron pandemic variant dented footfall.

Importantly, it said UK “footfall is now strong in major city centres as well as on high streets and retail parks”.

It all meant like-for-like sales were 11% ahead this time, supported by those higher unit volumes, by higher average selling prices and a normalised level of markdown. And sales in the week leading up to Christmas Day reached a new record. 

Of course, it was helped by retail selling space increasing from 17 million sq ft to 17.7 million sq ft year on year as all the new stores performed well.

The enthusiastic return to physical retail by consumers was key, Some e-tailers have faced lower traffic in recent months, but store-based businesses have been relatively buoyant and Primark’s phyiscal-retail-only strategy is paying off. Analysts who said this strategy made it a dinosaur in fashion retail are being proved wrong so far.

In the UK there was “a step-up in performance” with sales 15% ahead, nearly all of which was like-for-like growth. 

Primark’s share of the total UK clothing, footwear and accessories market by value (which includes online sales for its rivals), for the 12 weeks to 11 December reached 7%, up from 6.5% and close to the record trading when stores reopened in June 2021 after a prolonged lockdown. 

EUROPEAN AND US STRENGTH 

Trading in Europe was “very encouraging” with sales up 16% and growth in all markets. Like-for-like sales were 8% higher. 

It has been very active in Europe, unveiling 12 stores over the last 12 months. New stores in Bucharest, Romania, and in Caserta, near Naples in Italy, “are both performing particularly strongly”.

And even though the prior year had been very strong in the US (help by Covid-linked government stimulus), it still saw 4% growth there in the latest period. 

It plans to almost double selling space in the US in this financial year and has recently opened three stores — Roosevelt Field, Long Island; Jamaica Avenue, Queens; and City Point, Brooklyn. These are all are performing well. 

It’s opening another 17 stores this financial year: seven in the US, three in France, three in Spain, two in Italy, one in Romania, and its first store in Slovakia. That becomes Primark’s 16th market, with Hungary to be its 17th as it has signed a lease for a future store there. It’s also putting in place “a small number of relocations, extensions and a further planned store closure in Germany”.

As for digital, while the firm doesn’t sell online, its digital capability continues to develop. Improved functionality means the new UK website’s traffic has increased 85% since last year, with double the average pages viewed per session.  

The site has just been launched in the Republic

So what does this all mean for profits? The company said the adjusted operating profit margin in the period was “better than expected as a consequence of the sales performance”. But the margin was still “somewhat lower than in the same period last year as a result of inflation in the cost of bought-in goods driven by the significant strengthening of the US dollar against sterling and the euro, and higher freight rates, labour and energy costs”.

ABF’s expectations remain what they were at its last update with “significant growth in sales”, but adjusted operating profit to be lower than the previous financial year.