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Primark is a major clothing retailer employing 36,000 people across the UK, Ireland, Spain, Portugal, Germany, the Netherlands and Belgium. It offers customers high-quality, up-to-the-minute fashion at value for money prices. Over the last ten years we have doubled the number of stores, quadrupled the retail square footage and profit has increased by almost five times.

We see substantial opportunities for further growth in selling space in those countries where we currently operate.

Adjusting 2010 on to a comparable 52 week basis, revenue was 13% ahead of last year. We achieved like-for-like sales growth of 3% driven by a strong performance in continental Europe and some growth in the UK and Ireland. This was achieved against a background of weaker consumer demand reflecting a reduction in disposable incomes, particularly in the UK.

Profit on the adjusted basis was 8% lower than last year reflecting the decision to absorb some of the margin pressure caused by high cotton prices and the increase in VAT in the UK. By not increasing prices to recover all of its cost inflation, Primark chose to forfeit increased profitability for the support of its loyal customer base and maintained its position as offering the best value on the high street.

Revenue and adjusted operating profit for 2010 on a 53 week reported basis and, as shown in the segmental analysis in note 1, were £2,730m and £341m respectively.

Primark continued to strengthen its ethical trade programme this year with a focus on seeking improvements in workers’ rights within individual workplaces and more widely across the industry. We conducted 1,266 audits in the last calendar year, and ethical trade training is given to every new Primark employee. The ethical trade team based in the key sourcing regions was further expanded to increase our capability to work on delivering sustainable improvements in our supply chain. We share more than 98% of the factories we use with other high street brands and, in collaboration with other retailers and non-governmental organisations, we seek to address the challenges of the industry.

During the year our store design evolved to provide a more contemporary shopping experience with an improved layout, enhanced merchandising, more fashionable shop windows and customer-friendly navigational signage. This was showcased at the recent openings of stores in Dortmund, Germany and Stratford City in London in September.

Store expansion in this financial year was very strong with 19 stores and 0.8 million sq ft of selling space added. 11 new stores were opened in the UK, three in Spain including two stores in the Canary Islands, two in each of Portugal and Germany and one in the Netherlands. This brings the total number of stores to 223 at the year end and, having also completed a number of store extensions, we were trading from 7.3 million sq ft of selling space.

UK

	sq ft	stores
September 2010	4,720	143
Change in year	470	11
September 2011	5,190	154
	+10%

Republic of Ireland

	sq ft	stores
September 2010	1,010	38
Change in year	-	-
September 2011	1,010	38
	0%

Iberia

	sq ft	stores
September 2010	570	19
Change in year	190	5
September 2011	760	24
	+33%

Northern continental Europe

	sq ft	stores
September 2010	180	4
Change in year	140	3
September 2011	320	7
	+78%

Total

	sq ft	stores
September 2010	6,480	204
Change in year	800	19
September 2011	7,280	223
	+12%

 

The momentum of our store opening programme continues into the new financial year. Since the year end we have already opened in Braga Parque in northern Portugal, Malaga in Spain and Hannover in Germany which, at 94,000 sq ft, is our largest store outside the UK. Highlights later in the year will include a 75,000 sq ft store on Princes Street in Edinburgh, scheduled to open just before Christmas, our second store on London’s Oxford Street adding a further 80,000 sq ft next summer and our first store in Berlin. We are continually working to secure new stores in each of the countries where we operate.

We have made further investment to improve the efficiency, and increase the capacity, of our logistics network. The new warehouse in Naas, Ireland is fully operational. The warehouse at Torija, Spain was doubled in size and is now capable of handling garments shipped on hangers. Plans are being developed for a new distribution centre in northern continental Europe to service our fast-developing presence there.