Primark will open 10 new shops before Christmas as it continues with its expansion plan, the budget fashion retailer’s owner Associated British Foods (ABF) said.
The announcement comes after ABF held firm on its trading guidance for the year before its annual general meeting on Friday.
Michael McLintock, chairman of the business, maintained its forecasts despite warning the company expects “further significant input cost inflation” over the current financial year.
However, the firm said cost volatility has “diminished” since its previous update.
Mr McLintock said: “For the full year, we continue to expect significant growth in sales for the group, and adjusted operating profit and adjusted earnings per share to be lower than the previous financial year.”
ABF also told shareholders on Friday that trading at Primark – which trades in Ireland as Penneys – so far this financial year has been “encouraging” despite increased pressure on household budgets.
It said Primark is “on track” to open 27 new shop this financial year, with 10 to open in the run-up to Christmas. The group last month reopened its flagship Belfast store which had been closed since 2018 after a fire. It also started piloting a new click-and-collect option at some of its stores.
Reporting full-year results last month for the 12 months to September 17th, the company said sales at its Irish Penneys outlets had surged 48 per cent last year compared with the previous 12 months. That compared with ABF group-wide revenue growth of more than a fifth to £17 billion (€19.5 billion) and pretax profits that jumped by nearly a half to £1.1 billion.
At that time it said Primark would not increase prices any more than already planned before next autumn despite rising costs. ABF said that, as customers tighten their belts, it wanted to make sure they still see the brand as a cheap alternative to other high street retailers.
Meanwhile, the firm, which also owns grocery brands like Twinings and Patak’s, said profits in its food business are expected to be higher than last year.
RBC equity analyst Richard Chamberlain said: “We expect a strong recovery in sales given ongoing good recovery trends for store-based retailing, but margins are likely to be impacted by currency and other inflation pressures, and as Primark appears to be investing more in improving the convenience of its offer.
“On the food side of the business we expect grocery and ingredients margins to be pressured by higher input costs from energy, logistics and commodities, but sugar should see improved profitability, helped by firmer European and world sugar prices, albeit this remains a volatile business.”
Shares in the company were trading fractionally ahead at 1,656.50p in early trading. – PA