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Instagram Proves Instrumental in Primark Sales Increase

Primark, a property of Associated British Food, performed well the first half despite the challenges facing much of the apparel retail landscape.

In a Nutshell: Primark reported site traffic up 8 percent in the first half with an average of 8 million visits per month. The company credits social, in general, and Instagram, in particular, for driving traffic. The photo-sharing platform’s influence is so great that Primark said it posts photos consistently, and regularly provides new content to ‘Stories.’

Primark called out items like hooded puffer jackets and fashion denim for their strong sales performance and said mustard has been the color of the season. CEO George Weston said when it comes to the retailer’s spring/summer fashion assortment, he is “very confident.”

Primark attributed an increase in operating margin to better buying and inventory management.

“We are becoming more professional in our buying and focus on big suppliers,” CFO John Bason told The Wall Street Journal, adding that by reducing the number of suppliers it buys from the company is able to demand better pricing.

Cost of goods stands to decrease even further as the company ramps up its growth plans, which include new stores in England and Germany as well as one in U.S. The upcoming Brooklyn, N.Y. location will join the nine existing stores here, three of which will be rightsized to 35,000 square feet as Primark works to “refine the operating model.” Analysts who spoke to the paper said the retailer’s initial grand expansion plans for the U.S. have since been curtailed after it realized it may have overestimated the value of its name in the States.

Sales: ABF reported revenue of 7.4 billion pounds, a 2 percent increase over the prior year period.

Primark revenue was up 8 percent to 3.5 billion pounds ($4.9 billion), with the balance stemming from ABF’s sugar, agriculture and grocery businesses. Same store sales were down 1.5% during the 24 weeks.

Earnings: The company reported 491 million pounds ($692 million) in profits, a 30 percent drop from the same period in 2017.

CEO’s Take: “The group made progress in this period,” Weston said. “Good sales and profit growth was achieved by all of our businesses at constant currency, other than Sugar, where the reduction was as expected. Our full year outlook for the group is unchanged with progress expected in both adjusted operating profit and adjusted earnings per share.”