Primark is to extend its online click & collect service to London and expand in the southern US after reporting strong first-half sales.
The cut-price retailer said it had benefited from a return of tourists and office workers across UK cities, who had bought more items than a year before despite a 7% rise in prices.
Primark warned that sales growth was likely to slow in the coming months amid the cost of living crisis and higher interest rates.
The retailer’s parent company Associated British Foods said like-for-like sales rose by 10% at the budget clothing chain in the six months to 4 March compared with a year earlier.
In the UK, like-for-like sales climbed by 15%, as Primark attracted more shoppers on high streets and in retail parks, but also in its city centre stores which have become busy again as tourists and office workers have returned.
George Weston, the ABF chief executive, said tourists, such as people taking day trips, were the main reason Primark’s stores in London, Manchester, Birmingham and Liverpool were busier.
He said childrenswear, health & beauty products and basics, such as underwear, all sold particularly well, and the company had widened its appeal with the higher-priced Edit range which attracted shoppers who previously went to Debenhams and Arcadia brands such as Dorothy Perkins and Burton that have now disappeared from the high street.
A north-west England trial of click & collect services – which lets shoppers pick up orders made online at high street stores – also helped drive sales. The trial is now being extended to Primark’s 32 stores across Greater London.
The company is also to expand into Texas and expand from its one store in Florida after a strong performance in its first outlet beyond the south.
Faced with surging energy and freight costs, Weston said the company had raised its prices in the single digits, but “by less than costs, and less than others”, which meant profits suffered. Primark made a first-half operating profit of £351m, down by 15% from a year earlier. Childrenswear prices remain unchanged.
“The need for further price rises has reduced significantly just over the past few months,” he said. “We’re quite confident that most of the price rises that consumers were going to see they’ve already seen. And then I hope we can get back to the world we were in for 10 years where we move prices down, not up.”
The firm said sea freight costs had returned to normal levels, and energy prices had also fallen, although the strength of the US dollar against sterling and the euro is driving up the cost of bought-in goods. Operating costs excluding exceptional items went up by 24% in the first half across the ABF group.
The more upmarket Edit range for women has proved popular, along with a range created with the Spanish actor Paula Echevarría. Women’s unitard jumpsuits are “absolutely flying”, Weston said, while beauty, skincare and bags are also selling well.
ABF made a statutory profit before tax of £644m last year, up by 1%, while operating profit was down by 3% at £684m. It expects this year’s operating profits to be similar.
Shares in ABF were down by 3.2% on Tuesday, making it the top faller on the FTSE 100.
