Primark profits to exceed last year despite fourth quarter sales hit

In a pre close statement for the 53 weeks to September 18, 2021, Primark said sales for the second half were expected to be £3.4bn and that operating profit margin is expected to be over 10%. 

Like for like sales in the third quarter were up 3% on two-year comparisons, reflecting strong store reopening in the UK and Europe after the various lockdowns and coronavirus restrictions. 

However, the retailer noted that sales in the fourth quarter had been affected by the ongoing international emergence of the Delta variant - with sales expected to be 17% down on pre-pandemic levels. 

Primark also noted that sales were hampered in June and July by the “pingdemic” in the UK and corresponding caution from many customers. As self-isolation rules were eased in August, Primark said sales improved - from a decline of 24% in the first four weeks of the quarter to a decline of 8% in the last four weeks.

Primark stores in Spain and Portugal suffered sales declines due to lack of international tourism to the region, with sales declines above 30% in the fourth quarter on two-year comparables. While in France, Primark noted that the introduction of coronavirus passports by the government in early August also saw retail footfall drop. 

In the US, Primark retail sales for the fourth quarter were up 3%, with the retailer noting the minimal restrictions put in place by federal and state governments compared with the UK and Europe. 

Primark said its inventory grew £400m above normal levels during the last lockdown, but the retailer said it had reduced levels to normal with all spring/summer inventory brought forward from last year having been sold and the autumn/winter inventory held over from last season due to be be sold in the coming months.

The retailer said it would be launching a new customer facing website in the coming financial year, and was recruiting for digital expertise “to create a new digital capability within the business”.