Primark credits the right ‘pricing versus volume’ balance for sales uplift

Primark says the business has daily discussions to ensure its pricing hits the mark with consumers.

On an investor call this morning (23 January), Eoin Tonge, the finance director of Primark’s parent company Associated British Foods (ABF) said: “We probably spend every day of our lives in Primark worrying about whether we got the right price points… we look at it on a daily basis, not just monthly.”

He added: “The balance is okay, I would say in terms of pricing versus volume.”

Primark’s retail sales for the first quarter of its financial year rose 7.9%, with like-for-like sales growing 2.1% driven by an overall “higher average selling price”.

That figure was markedly stronger in the UK alone: total sales rose by 4.5% with like-for-like sales having risen by 3.8%.

The company says that sales of womenswear and menswear were strong, particularly in performance wear, leisure and tailored clothing, and in its Rita Ora collection. It also says its Christmas ranges performed well across the entire festive period, which is included in its Q1 results.

Primark’s market share reached a new record at 7.1% for the 12 weeks to 10 December, up 0.1 percentage point from last year.

Tonge sounded a note of caution on consumer spending power, however: “The consumer is still fragile. We see that in terms of our units per transaction, and so we shouldn’t underestimate that. There’s still some softness in the consumer, and that’s carried through the whole period.”

‘Benign’ pricing

In November, when reporting its full-year results, Primark said it would not be passing on cost increases to customers. That strategy appears to have been maintained in the face of an overall increase in the UK living wage and supply chain issues in the Red Sea. Tonge said: “That will all feature into [our] decisions on pricing. But… I still maintain I think pricing will be benign for a little bit longer.”

In the brand’s full-year results, it credited investment in its burgeoning online capabilities as driving incremental growth. Tonge continued that optimism about incrementality across Q1 and into the rest of the year: “It’s incrementality which will make us make our decision around whether we roll this out more broadly and how we roll it out more broadly.”

He said that the metrics around the take-up of the click-and-collect option “are still pretty good”. Crucially, he noted that the expansion of the scheme to date had avoided “cannibalisation” of in-store sales.

The company reported retail revenues of £3.4bn for the 16 weeks to 6 January 2024, contributing to overall revenues of £6.9bn for ABF. That represents a 5.4% increase in constant currency over the previous quarter.