Primark’s recovery from the doldrums of the COVID pandemic continues to gather momentum as its value proposition remains attractive despite high inflation in its key markets.
Primark’s owner has reported “very strong” trading over Christmas, admitting that consumer spending was stronger than it had anticipated amid the squeeze on household budgets.
Associated British Foods (ABF) reported a 15% rise in retail sales over the 16 weeks to 7 January.
In the UK, Primark said much of its 15% lift on the same period last year was achieved on a like-for-like basis, meaning the growth could not be credited to new Primark store openings.
The company pointed to record demand in the run-up to Christmas, with its sales on the continent and elsewhere also rising on the back of its value offering.
The prospect of a discounted shopping experience has proved attractive to consumers across much of the western world given the pressures placed on the purse strings from energy-led inflation.
The cost of living crisis has been the main threat to retailers – especially those in the non-essential spending sphere.
Official retail sales figures for the UK, released last week, showed a surprise drop during the key month of December despite a largely upbeat set of trading updates from listed retailers since the festive season finished.
ABF, which also owns major sugar, grocery, agriculture, and ingredients businesses, said its total revenue rose 16% on a constant currency basis.
Despite the upbeat performance, the company said its outlook for the full year was unchanged.
It is expecting adjusted operating profit to be down on the 2021-22 figure of £1.4bn.
The group said it continued to encounter significant cost pressures but inflation had become less volatile and some commodity costs had declined more recently.
It said of the performance at Primark: “To date, Primark trading has been good in all our markets and was ahead of expectation.
“Early trading in this new calendar year has been encouraging but macro-economic headwinds remain and may weigh on consumer spending in the months ahead.”
