Primark owner, Associated British Foods, has set out ambitious expansion plans as it bets on a strong sales rebound from the Covid-19 pandemic, with customers returning in large numbers in countries where vaccines have been rolled out.
The fast-fashion retailer is planning to open more than 100 new shops over the next five years, as it pushes into the US, France, Italy and Spain. It would take the number of stores worldwide to 530 from 398 at present.
In the US, where Primark opened its first store in Boston six years ago, it plans to go from 13 to 60 outlets over the period.
Paul Marchant, the Primark chief executive, said: “With our current portfolio trading really well, it feels like we’ve established a strong foundation from which to accelerate our expansion in the US market.
“The team is working hard to convert the sizeable growth potential we see in the market into more new Primark stores – and more loyal Primark customers.” The retailer has signed five new leases in the New York region, including in Brooklyn, Long Island and Albany.
Primark reported a 12% drop in like-for-like sales from pre-pandemic levels in the year to 18 September. This is better than the 24% decline posted in some weeks over the summer, when many people had to self-isolate in the UK amid a “pingdemic”. The clothing chain’s full-year adjusted operating profit rose 15% to £415m.
Shares in parent company ABF jumped 6% on Tuesday morning, making it the top riser on the FTSE 100.
Michael McLintock, the ABF chair, said: “Absent the reimposition of significant restrictions, we expect Primark trading to continue to improve and for sales to increase by at least the estimated £2bn of sales lost due to store closures last financial year. Primark will continue to expand its selling space next year, with the most stores being added in two of our key markets, Italy and Spain.”
ABF, which owns a number of brands including Ovaltine and Twinings, said it was “not immune” to supply chain problems and rising raw material costs and wages, and that it would raise some food prices as a result.
The group said it had been affected by supply chain bottlenecks caused by the Suez Canal blockage and a shortage of HGV drivers, which had been worsened in the UK by its exit from the EU.
McLintock said: “We are seeing significant cost increases in energy, logistics and commodities in addition to the impact of widely reported port congestion and road freight limitations. Our businesses are working to offset the impact of these through cost savings. Where necessary, our food businesses will also implement price increases.”