Budget retailer Primark achieves 22% growth in sales in 2013

A rise in sales for budget clothing retailer Primark has boosted the profits of its owner Associated British Foods, the BBC reported today.

Primark’s revenue increased by 22%, to GBP4.27bn, for the year ending 14 September 2013. The fashion store’s like-for-like sales also rose by 5%, despite the economic turn down. In addition, the company’s operating profit accelerated by 44% to GBP514m. This was helped by the lower price of cotton and strength in summer trading, which meant there was less need for markdowns in the second half. These results are also said to be due to the company’s low pricing structure and its fast adoption of the latest fashion trends.

Associated British Foods, which also owns British Sugar and several food brands such as Kingsmill, Ryvita and Ovaltine, has reported a 13% rise in full year pre-tax profit to GBP1.1bn. The group’s total increased by 9% to GBP13.3bn.

During the year, Primark expanded in Europe with the opening of 15 new stores, four of which are in the UK and include a second store on Oxford Street in London. The fashion chain now has 257 stores in eight countries around the world. It reportedly plans to open another 13 stores by Christmas, including five in Spain and its first store in Marseille, France.

According to AB Foods, Primark had also made ‘significant progress’ with its ethical trade programme following the collapse of the Rana Plaza factory in Bangladesh in April this year, which killed more than 1,100 people. AB Foods has reportedly paid short-term financial support of six months’ salary to more than 3,600 people who worked in the building, irrespective of their employer. It added that Primark now has 40 in-country ethical trading specialists, including eight located in Bangladesh.

HMV face uncertain future as sales decline

Ailing retailer HMV have reported that like-for-like retail sales have dropped by 13.2 per cent compared to last year in the run up to Christmas.

 

The shocking figures have left the company with an uncertain future following warnings from the City that forecasts for the company to break even this year now looked optimistic.

 

Not only have the company had to face a decline in sales in the weeks leading up to December 17, but also the news of the retailers pre-tax almost doubling to £45.7million in the half-year to October 29, in comparison to £24.7million.

 

After recently selling bookseller Waterstone’s, the group have announced it would be placing HMV Live – which operates 13 venues and a number of festivals – under strategic review and could lead to its sale.

 

The retailer, which own 252 stores in the UK said its shift in focus on technology was paying off, after 144 stores were refurbished to reflect the new emphasis. Like-for-like sales of headphones, speakerdocks and tablet computers were up 144 per cent compared to last year.

 

However, HMV said in its core markets – music, visual and games – as a result of store closures it lost market share.

 

Following the announcement of the groups £10million cost savings plan, 60 stores are set to close, and 15 will be shut in the first half of the New Year.

 

By selling Waterstone’s and HMV Canada, this enabled the group to raise £55million ensuring a £220million refinancing deal with its leading banks.

 

Simon Fox, Chief Executive admitted that HMV had seen ‘a challenging start’ to the new financial year.

 

He said: “We have take decisive action to restructure the business and are now seeing the benefits of this, particularly in our technology products business”.

 

“Like all consumer-facing companies we are facing tough trading conditions but we continue to push forward through this period. We remain well prepared for the key trading days ahead”.

 

Article by Charlotte Greenhalgh