For the year to September 18, 2021, Associated British Foods plc reported revenue of 13.9 billion pounds, in line with last year at actual exchange rates and 1 percent ahead at constant currency. The company said in a release that Primark sales in both years were impacted by trading restrictions and store closures. The periods of closure were longer this year compared to the last financial year and sales declined by 5 percent at constant currency as a result. However, the company expects Primark trading to continue to improve and for sales to increase by at least the estimated 2 billion pounds of sales lost due to store closures last financial year.
Adjusted operating profit this year of 1,011 million pounds was broadly in line with last financial year, and Primark operating profit margin improved this year with an adjusted operating profit of 415 million pounds compared to 362 million pounds last financial year.
Commenting on the annual trading results, George Weston, chief executive of Associated British Foods, said: “Our financial performance this year more than ever demonstrates the resilience of the group. Although the possibility of further trading restrictions cannot be ruled out, we expect Primark to deliver a much improved margin and profit next year. We are announcing a special dividend for shareholders today.”
Primark expects sales recovery this fiscal
Primark will continue to expand its selling space next year, with the most stores being added in two of the key markets, Italy and Spain. The company further said that the expected significant increase in sales should lead to a sharp improvement in Primark’s adjusted operating margin, recovering to above 10 percent. The company also expects challenges of supply chain, raw material cost and labour rate inflation to be broadly mitigated by the transaction currency gain arising from the weaker US dollar, improved store labour efficiency and lower operating costs.
Despite this decreased level of trading days, adjusted operating profit, before repayment of job retention scheme monies, increased 15 percent to 415 million pounds at Primark representing an adjusted operating profit margin of 7.4 percent for the full year. Operating profit margin improved during the year from 1.9 percent in the first half to 10.6 percent in the second half, excluding the 53rd week.
When stores were open, full year like-for-like sales were 12 percent below two years ago and were 7 percent lower excluding destination city centre stores. Like-for-like sales declined by 17 percent in the fourth quarter
Primark to expand store network in the key markets
At year end, Primark was trading from 398 stores, after its new store in the Fashion District of Philadelphia in the US opened on 16th September. Fifteen stores were added this year: four stores in the US; four in Spain; two in Italy, and one each in France, the UK, the Netherlands and Poland, as well as its first store in Czechia. The company also relocated to new premises in Southend.
In the next financial year, Primark plans to open eleven stores including four new stores in Italy, four new stores in Spain and one store each in the US, Czechia and Ireland. Over the next five years, the company expects its store estate to grow to 530 stores from 398 at financial year end.