Primark is looking to strengthen its digital marketing capability in order to deliver “more personalised content” to customers, as the value retailer highlights the “critical role” digital will play in the marketing mix.
The business is progressing the design and development of a new digital platform and stepping up the recruitment of talent to create a “digital capability within the business”. The retailer plans to launch a “new and improved customer-facing website” in 2022, which will allow Primark to showcase a larger proportion of its range and provide customers with range availability by store.
In a trading update posted today (13 September), Primark says it expects sales in the second half of the financial year to reach £3.4bn. The retailer’s operating profit margin during the period benefitted from a significant reduction in store labour costs and lower store operating costs, and is expected to be over 10%. The profit forecast for the full year is now ahead of the profit delivered in 2020.
Like-for-like sales in the third quarter were 3% ahead of the comparable period two years ago, reflecting “very strong trading” in the UK and European regions where stores reopened. Primark says customers returned to stores with “enthusiasm” and sales reflected pent-up demand with “very high” basket sizes.
UK sales were, however, affected by the “rapid and significant increase” in late June and early July in the number of people required to self-isolate following contact tracing alerts.
Since the self-isolation rules relaxed in August, Primark’s like-for-like sales have gone from a decline of 24% in the first four weeks of the quarter to a decline of 8% in the last four weeks. Data shows that in the 12 weeks from 31 May to 22 August the retailer claimed the same value share of the total UK market as it did two years ago.
From a fashion perspective, Primark notes a continuation of the trend for ‘comfort living’, with strong sales of leisurewear such as leggings and cycle shorts, and continued demand for seam-free matching separates for women.
The retailer also highlights a “good response” to the launch of new licensed product, with its latest womenswear tie-up with Disney proving particularly popular. Sales of autumn/winter ranges have started well, especially the back-to-school collection.
Following the reopening of its stores, Primark’s inventory levels have returned to normal and all spring/summer stock brought forward from last year has already been sold. The retailer anticipates that autumn/winter product held over from last season will now be sold in the coming months.
While the pandemic has slowed its progress in developing a pipeline of new shops, Primark says it expects to see an “acceleration” in new store openings in future years. The business did open 15 stores globally this year, including one in the UK, as well as downsizing three of its outlets in Germany.
During the next financial year, the business plans to add a net 0.5 million sq ft of additional selling space, including four new stores in Italy, four in Spain and one store each in the US, the Czech Republic and Ireland.