Primark has become one of the strongest retailers on the high street, with its low prices and a wide choice attractive to consumers even during the depths of the recession. Fortunately for the brand, and parent group Associated British Foods (ABF), recovery has not seen its customer base turn to more expensive rivals, allowing Primark to forecast an annual like for like sales growth of 4.5 per cent.
Although analysts were disappointed with the result, having predicted growth of 5.2 per cent, the figure will push the total sales performance in the year to the 13th of September to 17 per cent ahead of last year. Not only will this prove to be a strong result given the uncertainties within the retail industry, it will serve to offset losses at ABF’s other divisions, primarily its AB Sugar company.
In part, ABF attributed the steep rise in sales to the strength of Primark’s seasonal lines in a statement released ahead of the official full year results.
It said; “Good like for like sales growth was driven by highly successful autumn/winter and spring/summer ranges.
“Sales over the Christmas period were excellent and were boosted in the third quarter by warm weather, especially in the spring and early summer, which led to good trading across the group and outstanding results in Spain.
“Early sales of the new autumn/winter range are encouraging.”
Yet while exciting ranges have certainly played a part in the brand’s excellent annual performance, many industry experts believe that ABF’s strategy of building a strong store portfolio lies at the heart of Primark’s success.
During this financial year, executives made the decision to close seven smaller Primark stores, choosing instead to focus upon large scale openings with higher floor space – generally in areas which had seen store closures either this year or last year.
As a result, 28 new stores opened throughout the UK this year, bringing Primark’s total store count to 278. Perhaps more significantly, the brand now controls more than 10.2 million sq ft of retail space in the UK, with this set to increase further next year.
During the year, the brand purchased a Birmingham shopping mall with the view to creating one of its largest international stores – around half of the internal floor space is set to become a single store, with the remaining square footage to be redeveloped and leased out. This bold move has created something of a buzz both domestically and overseas, with the news particularly well received in the USA; Primark’s next target market.
ABF also used the statement to confirm it has stepped up its expansion into the states, having signed a lease for a 70,000 sq ft store in Boston. It has also entered into discussions with 10 other landlords in north-east America, which if successful will presumably see a flurry of new store openings next year.
With Primark going from strength to strength, it seems that this high street brand, at least, is set to continue its success.
