Primark, the value fashion giant, revealed sales soared 20% in the year to September 12 with like-for-like growth of 7%.
Primark’s parent company Associated British Foods said in a statement that the retailer delivered “exceptional” sales and profit growth “even though each of its three main markets were subject to recessionary pressure and a decline in consumer confidence”.
Sales were £2.3bn on adjusted operating profit of £252m during the year.
It added that Primark, which celebrated its 40thbirthday this year, was “in the vanguard” of the growth of the value sector.
Sales growth was driven by store openings with 12 stores opened during the year – five in Spain, four in the UK and debut stores in the Netherlands, Germany and Portugal. Primark now has 191 stores and 5.9m sq ft of selling space, an increase of 9% since the last year end. ABF invested £159m on the acquisition and fit out of new stores for Primark.
Primark said that the stores in continental Europe performed “well” and plans are in place to open 11 new stores in the coming year, including a first store in Belgium.
Primark said that organic growth was achieved through Primark’s “strong competitive position, its highly appealing merchandise and better weather than last year”.
Operating profit margin declined from 12.1% to 10.9% during the year, largely due to increased fixed overheads at its distribution centre in Thrapston. Margins were also impacted by the weakness of sterling, which increased the cost of product sourced in dollars. Currency fluctuations impacted the second half of the year because of Primark’s hedging policy.
However, the retailer said that the hit to margins was offset by better buying, lower freight costs and a more profitable sales mix.
Primark forecasted that margins would drop in the period up to Christmas but improve at the beginning of 2010 with the benefit of forward buying of US dollars at improved exchange rates.
Primark reiterated that its ability to offer low prices was due to its large volumes, low mark-ups, minimal advertising and low overheads. It added that its flat management structure enabled it to respond quickly to changes in the market. More than 95% of its third party suppliers are shared with other brands, it said.
Primark added that it had contributed to industry-wide efforts to improve labour standards. It has committed to undertake over 1,000 audits in 2009, almost doubling the number done last year. It appointed ethical trade director Katharine Kirk during the year and has strengthened relationships with non-government organisations, especially in China, India and Bangladesh. It has also doubled the size of its in-house ethical trade team around the world.
During the year, Arthur Ryan announced that he would step down as chief executive of the group to concentrate on his role as chairman.
Paul Marchant has taken on the day-to-day running of the business as chief executive.