I'm live. It really is fantastic to see you all in person. It's a moment that I think John and I have been looking forward to very much. We did have a sort of sweepstake on how many analysts would turn up and whether the room would be filled solely with advisors of our own.
We did have to come along just in case.
Oh, okay. Yes, we did. We had fear, a little bit of fear of just speaking to a completely empty barn of a room. Thank you for coming to this review of the annual results for the 53 weeks ended the September 18th. Let me start with this slide. We really have been squarely in the path of this pandemic. We've now lost 43 people to COVID-19 all around the world, and the economic effects of COVID are very evident in these results. The resilience of the group, I think, is demonstrated more than ever. Primark trading recovering well from lockdowns and also recovering well from the uncertainties of more recent times. Strong food performance underpinned by strength and diversity of our brands of our products, our markets, our very diversity.
The resilience is also shown by the balance sheet at year-end. I don't think we've ever had GBP 1.9 billion of cash on our balance sheet. John will talk about dividend policy as a consequence of some of these cash piles. We want to talk about it today, the confidence of Primark's rollout is undiminished, and quite frankly, the opportunities for further development for growth through investments in the food portfolio, I think our confidence has never been higher. Let me, though, go on to the financial highlights, and they are these. Group revenue at GBP 13.9 billion. Adjusted operating profit at GBP 1.1 billion. Adjusted profit before tax, then GBP 908 million. Adjusted Earnings Per Share, 80.1 pence.
Dividends per share, GBP 0.267, for the year. Then the special dividend, which John will come back to and explain it in greater detail, GBP 0.138. We've invested GBP 721 million of new capital during the year. As I mentioned before, net cash pile, GBP 1.9 billion. The business highlights for us are these. Customers returning to Primark stores in very large numbers. A very creditable profit margin in the H2 of 10.6% in Primark. Important number, that one. Then, of course, over the course of the year, we have launched a very wide-reaching, very important new sustainability strategy for Primark.
We've had two ESG days, one on the group and the total, and one on Primark, and I think important statement of purpose. Our food business' adjusted operating profit increase of 10% on top of a very good year last year. Strong year for AB Sugar. New capital allocation policy, again, for John to go into detail on later. We're quite chuffed about the Standard & Poor's A grade stable outlook credit rating recently awarded to us. Let me pause and hand over to the finance director, and I'll come back later to talk about the businesses.
Great. Thanks very much, George. I really would echo George's comments. It's great to see so many of you here in person. Group revenue was GBP 13.9 billion. That's in line with last year at actual exchange rates and 1% ahead at constant currency. This revenue is still below the level of sales reached pre-COVID in financial year 2019, and mainly reflected Primark store closures. One-third of the trading days available to Primark were lost this financial year, an increase on the number of days lost in the prior year. Importantly, our growth in our food businesses continued this year, and that was with a combined increase in revenue of 5% at constant currency.
Adjusted operating profit for the group this year was GBP 1.011 billion, and that was broadly in line with the last financial year. The combined adjusted operating profit for our food businesses was actually strongly ahead, and that was at 10% ahead of the prior year. Net of the job retention scheme repayments that we made this year, Primark's profit declined. But as I'll show you later, excluding these repayments, both margin and profit for Primark increased. For the full year, the average rates used to translate the income statement resulted in a translational loss of GBP 36 million, and that's primarily driven by the strengthening of sterling against the US dollar. Arriving at the adjusted operating profit, exceptional items totaling GBP 151 million this year were excluded.
This mainly comprised the impairment of GBP 141 million of certain plant and equipment in our sugar businesses. I think we've already explained to you, and that was in the pre-close trading statement. This includes a non-cash exceptional charge of EUR 136 million to write down the net asset value of certain plant and equipment in our Spanish business Azucarera. Following a review of smaller sugar businesses, we've also taken a non-cash charge of GBP 21 million to the relevant net asset values. Now these exceptional items also include the inventory charge of GBP 21 million taken at the half year for Primark. You'll remember that related to the clearance from our stores before the spring reopening of certain autumn/winter items still on display, and that provision's been fully utilized.
If you cast your mind back to last year-end, we had a GBP 22 million markdown provision taken for potential damage of Primark inventory stored on our behalf by suppliers for longer than usual as a result of the pandemic. That wasn't needed, and we released that in the year. Moving on. The unadjusted or statutory operating profit of GBP 808 million was in line with last year. Profit on the sale of businesses this year follows the transfer of certain yeast assets in China to the now operational and successful joint venture with Wilmar. Net interest expense decreased from GBP 113 million to GBP 102 million, and that's following the repayment of GBP 25 million of private placement notes during the year, and there was no RCF interest because that facility was undrawn this year.
Profit before tax increased by 6% to GBP 725 million. Now turning to the tax charge. The group's adjusted effective tax rate was again elevated, and you can see it was 28.1%, and that's with a lower proportion of the group's profit generated in the U.K. and Ireland because of the lower profitability of Primark compared to pre-COVID levels. However, this rate is lower than you were expecting. You probably had about 30% in your numbers because of the better margin performance by Primark in the H2 of this financial year. Based on current tax rates and a recovery in Primark's profitability, we expect the group's effective tax rate to fall next year to a level closer to pre-COVID levels, okay? As a reminder, the effective rate in 2019 was 21.5%.
It won't be as low as 21.5%, but it's getting towards it, okay? Adjusted Earnings Per Share were 8.1 pence. No dividends were proposed for our 2020 financial year due to the effect of COVID-19 on the group and the uncertainty at the time of considering the dividends for future cash flows. This financial year, the board declared an interim dividend of 6.2 pence, which was paid in July. The board has now proposed a final dividend of 20.5 pence and is also declaring a special dividend of 13.8 pence. Taking the interim and the final dividend together gives a total of 26.7 pence for the year. This is three times covered by the Adjusted Earnings Per Share of 8.1 pence.
After no dividends relating to the 2020 financial year, the payment of the ordinary dividends, 3x covered by adjusted earnings per share, that principle is re-established this financial year. The board is pleased by the recovery in trading across the group's activities, the highly effective management of cash, and the reduction in financial leverage. As a sign of our confidence, which is looking forward, the board is also declaring a special dividend of 13.8 pence per share, and that's gonna be paid as a second interim and at the same time as the final dividend. The amount of this special dividend was determined such that taken with the final dividend proposed for this year, the aggregate equates to a final dividend of 34.3 pence per share, which is the same as the one that we paid in the 2019 financial year.
That was our highest ever final dividend and was based on the group's pre-COVID profitability. Total dividends for the year are therefore GBP 0.405. Now moving on to the balance sheet. Net assets increased to GBP 10 billion, and that's GBP 0.6 billion higher than last year. That was driven by the following, an increase in net cash of some GBP 350 million to GBP 1.9 billion, and it's also by an improvement of actually some GBP 560 million in the net pension assets. Those two then are net of a translation loss of some GBP 350 million following the strength of sterling against the euro and U.S. dollar between the two year-ends.
Over the year, the U.K. defined benefit pension scheme surplus improved sharply, and that was a result of a strong performance by the scheme assets and the rise in bond yields. Working capital at the year-end was in line with last year, but was ahead at constant currency. Inventory has been rebuilt at AB Mauri and ACH from the very low levels last year and partially offset lower inventories in sugar and our DON meat business. The last two years really have underlined our long-held belief that the group should have sufficient financial resources and credit strength to invest for growth and to meet the operational challenges faced by our businesses.
This year we codified our approach to financial leverage with the adoption of a financial leverage policy that the group's ratio of net debt, including lease liabilities, to Adjusted EBITDA should be well under one and a half times at each half year and year-end reporting date. Importantly, in exceptional circumstances, the board would be prepared to see leverage above that level, but for a short period of time only. I'm pleased that the S&P Global Ratings have just announced that they've assigned the group an A grade long-term issuer credit rating with a stable outlook. In their words, this reflects the strength of the group's businesses, their diversity, strong group credit metrics, and all underpinned by conservative financial policy. We will be paying most of the high coupon private placement notes from our existing resources, and we're perfectly capable of being able to do that this financial year.
The amount you can see is GBP 223 million. Then as a reminder, we still have an undrawn revolving credit facility of GBP 1.088 billion with a term to July 2023. Capital allocation policy. This is something that I really want you to pay attention to. Our priority is always to invest in our businesses. Of course it is, both organically and by acquisition. This will be at an appropriate pace, and we have strict internal policies to ensure that every growth opportunity, be it organic investment or M&A, that they can generate an attractive return on capital. The presentation today that George will make will make clear that we see considerable opportunities both over the short term and the medium term, and across all our businesses.
Nevertheless, the ability to invest our capital is inevitably subject to the timing of these opportunities and practical limits as to the amount that can be invested within a given timeframe. As a result, from time to time, the board may conclude that it's got surplus cash and capital. In making this assessment, the board will seek the financial leverage to be below 1.0 x. The board will also then want substantial net cash balances, and then at both half and full year ends, and the policy will be subject to the board's discretion. Surplus capital may be returned to shareholders by special dividend or share buybacks. Moving on to cash flow. Last year, the group generated GBP 898 million of free cash after lease liability payments.
The free cash flow this year was lower, at GBP 469 million. I think the cash flow last year was actually large. The drivers of the change that we had a small working capital outflow this year, and that compared to the inflow last year, and an increase in both the repayment of lease liabilities and tax paid. The working capital reduction in the 2020 financial year of GBP 106 million was unusual, and was mainly COVID-19 related, with lower inventories in Primark and some of our businesses obviously not operating this year. The repayments of lease liabilities increased with the signing of new leases during the year, and last year benefited from a higher level of rent concessions than this year.
The increase in tax paid this year is primarily due to a GBP 23 million payment that was required by HMRC this year following the 2019 European Commission decision that found that the U.K. law did not comply with EU state aid rules. It was also affected by top-up tax payments made this year following strong final quarter last year. Capital investment for our food businesses was ahead of last year. Actually looking forward, George will tell you a little bit about some of the capital investments that you see in our food businesses to support their growth. Primark was behind last year with further delays to our store opening program caused by the COVID-19 restrictions, but we still successfully opened 15 stores for the year. Next year we expect an increase in CapEx in Primark, and that's driven by investment, particularly in technology and in warehouses.
Dividends paid to shareholders. This year the GBP 49 million are related to the 2021 interim dividend, and last year the GBP 271 million related to the final dividend for the 2019 financial year. Finally for me, let's just have a look at the performance analysis by business segment. Revenue was ahead in each of our businesses, food businesses, grocery, sugar, agriculture, and ingredients, and combined was 5% ahead of last year at constant currency. Grocery revenues were 3% ahead of constant currency, with especially strong sales growth from Twinings Ovaltine. Although there was a small decline in some retail volumes compared with the elevated levels seen last year, the development of our brands continued. Adjusted operating profit, however, declined, driven by weaker corn oil margins at ACH.
The profit decline this year I think really should be seen in the context of the very strong profit increase last year, so it was 15% last year. That gives you a 12% growth from this number over two years. Sugar delivered another year of very strong improvements, and we're really pleased with the result here. Illovo recovered and all businesses delivered cost savings. Our focus in this business has been to deliver an acceptable return on capital over the cycle, and I would turn your eye to the return on average capital employed, which reached 10.2% this year. Primark lost an estimated GBP 2 billion of sales during the time of store closures. Probably the number's a bit bigger because of where the like-for-likes were when the stores were open.
When our stores opened after, in the spring after a long lockdown, customers returned in large numbers. George is gonna take you through the trading in more detail. After a third quarter like-for-like, the final quarter was really affected by COVID restrictions and were down by 17%. Like-for-like sales have improved significantly since then. Importantly, excluding job retention scheme repayments, there was a strong profit margin recovery reaching 10.6% in the H2 . That's all about giving us confidence for margin in the new year. By geography, segmental analysis, revenue, and profit in the U.K. continued to be affected by store closures of Primark.
However, the job retention scheme repayments of GBP 72 million is included in the number in 2021 here, and so without that, margin and profit improved year- on- year. In Europe and Africa, the profit recovered by Illovo, which is startling, more than offset the effect of store closures in continental Europe. Revenue and profit in the Americas benefited from a strong performance from AB Mauri yeast and bakery ingredients. Asia-Pacific sales benefited really from a good Twinings Ovaltine performance in the region. I'm now gonna hand you back to George. Thanks.
Thanks, John. We're actually gonna start this business review with Primark this time. There's perhaps more going on of relevance there than anywhere in the group, but I would ask you to still be paying attention when I get to agriculture at the end of this presentation. Retail, we estimate we lost GBP 2 billion, as John said. Customers returned in large numbers after we reopened. The important part of this line is the well-ordered stores, hugely to the detriment of store operations people. We have magnificent capability in store operations. It's one of the things we do incredibly well. We're delighted when inventory returned to normal levels. It's where it is now. Turning inventory into cash allowed us all to breathe much more easily.
The profit point has been made, but I'm banging home one last time, 10.6% in the H2 . Please don't forget it. The wide-ranging new sustainability strategy, Primark Cares, was launched both with investors and also, most importantly, in stores, and I'll focus on that in a little bit. 15 stores added in eight markets, including the first in the Czech Republic. This is how we lost a third of all our available trading days versus 25% the year before. Obviously, not only did we lose trading days to stores shut, but we lost trade to other restrictions.
That explains, I think, the 15% like-for-like decline in the H1 when some of the stores were open, some were shut. We saw lower footfall, lower category expenditure. The third quarter, that was when people came back to the stores after reopening across large parts of Europe, U.K. and Ireland in particular. Very large basket sizes, queues, et cetera, all great. Then the fourth quarter, I think we were really hard hit by the pindemic, the contact tracing alerts, and we were also hit by the absence of people shopping for summer holidays and the absence of tourists.
In Iberia, we have a number of really good stores that ring tourist destinations around the coast of Spain, and like flights there were sort of half of where you'd expect them to be in a normal season. That was last year. Where are we now? Well, all the stores are trading, thank goodness. Some still have restrictions, but not too badly and not too many. We've seen, as John said, a significant improvement in the like-for-like run rate from the fourth quarter, that -17%. I have to say it, post-pandemic equilibrium has not yet been reached. It is bumpy. We have some really good weeks. We have some disappointing weeks. We see the effects of new mask mandates of new store limits on customers. It all has an effect.
We think it's getting better, but in a sort of bumpy way. We're confident in Christmas. We think Christmas will be good. We think people will want to have Christmas together that they missed last year in the U.K., in particular, and we're well stocked for that. We think next summer, we'll have a much better holiday and tourism season than we have this year. Another reason for thinking that our like-for-likes are going to build. I think, over time, the nervousness that a lot of people still feel about shopping on high streets will reduce. There is still significant nervousness amongst important parts of our shopping population. We're navigating the supply chain disruptions, but it is difficult.
We think over the next year it will become less difficult, but I'm not sure these difficulties in total will go away. I think everything is just gradually getting better, albeit with bumps. Those supply chain disruptions start in the factories, the power restrictions in China at the moment. Inventory handover from suppliers, delays in getting supplies onto ships at ports, delays getting supplies off ships in destination, then difficulty getting supplies goods out of the ports into our warehouses. It is difficult. We're managing it closely. We're prioritizing the product that's most in demand. We prioritize Christmas. We prioritize elements of women's fashion in particular, which is relevant for Christmas. We think that our scale gives us our advantage.
We have longstanding important relationships with transportation companies, logistics providers, and our warehouses are in good shape. I will go into that in a little more time. Good stock cover before Christmas. For the full year compared with last year, we expect that profit margin to remain sort of where it was as we closed last year, so above 10%. The drivers of this, we are forecasting that the stores will remain open for this year. We're forecasting that we'll continue to see better like-for-like trading and it getting better as the year goes by. There is inflation in raw materials, in distribution costs, et cetera, that we all know about.
We expect those pressures to be broadly mitigated by lower store operating costs and then transaction currency gain from weaker U.S. dollar exchange rates. That is where we are now. Let me move on to Primark on the product. Licensing, as you will know well, is an important part of our sales mix. It's still fast-growing. The relationships with global brands are getting stronger and stronger. We've done some really nice collaborations over the last 12 months with Disney around sustainable product in particular. Licensing now covers a whole range of media channels, gaming, TV, lifestyle, music, theatrical, toys, sports, et cetera. It's not just all sweatshirts and T-shirts. Increasing number of product categories and services, we're working with licensing providers.
New partnerships with the NBA and the NFL have brought us a broad range of products. We've got dedicated sports zones now in 20 stores, and they perform very, very well. Staying on product, the Snuddie, our response to desire for comfortable living. It is trademarked, and that's great, and we can't keep it in stock, even though we're prioritizing its uploading. Snuddies are flying off the shelf, and why wouldn't they be? Looking forward to Christmas, FamJams hit the stores again just last week, and the response has been brilliant. The Primark wrapping paper bag is back. Homeware, our biggest ever home entertaining range.
We think that will play very well into the desire that we anticipate for families to want to get together and entertain one another at home. Tremendous value, of course, in the home range. The vase you might be able to see there is GBP 4 and the wine glasses two for GBP 12. Embracing customer trends. Now, this is important too. We have a new an excellent range which we're calling the great outdoors. That parka on the left-hand side of my picture sells for GBP 40. It is a very high performance high quality item of clothing. It's high functionality, waterproof. We've got boots in the range. We've got breathable trousers in the range. We can sell that product very successfully and are doing so.
Higher price points, getting into the space that's perhaps been vacated by others who have left the high street. It's also important to say that now 60% of that range is made from sustainable or recycled fiber. 60% of it. The trench coat on the right-hand side, I think is also indicative of the space that opportunity that we have. It also sells out as soon as it comes into store. It is part of our Primark Edit. These are classic designs that will last from season to season. That trench coat is £40. I challenge you to find something similar of similar quality for under £100 anywhere else.
That Primark Edit range, women's clothing at the moment, higher price points, higher fashionability, longer lasting, and we are selling them very, very successfully indeed. We think there's space for us also to expand our home range. We've now got dedicated space in, for home in 40 stores. The picture on the left-hand side is Merry Hill. It shows you just the extent of our ambition. Much wider range of quality, affordable home and lifestyle products. We've got ceramics for the first time, cookware, rugs, small pieces of furniture, all very attractively priced, and we think there's room for us in that category as well. Primark Cares then, and I hope most of you will have listened to our Primark Cares ESG presentation.
We're positioning Primark very overtly as a pioneer for making sustainable fashion affordable for everyone. The three pillars, inevitably product, and rightly planet and people. One in four items of clothing is sold from recycled or more sustainable, sustainably sourced material. The Cotton Connect relationship and the training of farmers in developing world up to 160,000 by next year is really important part of what we do. We think that this gives us an opportunity to drive further sales with both new and existing customers. As we're at pains to point out in the ESG presentation, we really are confident of our ability to mitigate increased costs that may come from this Primark Cares program without any significant movement in margin over the long time.
Most important, maybe, we've launched this product not only to our investors but also to our customers under the How Change Looks tagline. These are the nine pillars that you will have seen. We're very open with these, with our customers. I think the How Change Looks, if we go onto the next picture, ads and information which are in store now are very impactful. We have got early days yet. We've got fantastic reaction from our own staff. They're young, they're our own shoppers, and they love what we're doing here. Positive customer reaction, as I say, early days. Turning on to digital.
We've done a lot of work this year on digital, both thinking about where to head and where we are now. Our diagnosis is this. We've got 24 million engaged followers on our social media channels, but gee, we make life far too difficult for them. There are evident limitations in allowing those engaged followers to get from a social media channel to our own website. We're putting that right. Poor user experience, and there's no link from social channels to the website. When you get to the website, we don't actually tell you much. We don't show you much. We show you about 20% of the range, and we give you not great imagery around. We don't tell you whether it's ranged in the store or not.
It's not a great experience. We also know that that we're only catching very limited amounts of the passing digital footfall from non-Primark's related search. If you type blue jeans, women's jeans into a search engine, Primark will come up on page Z, I think. Certainly not early on, and we think we can do something about that. The design and the development of the new digital platform is progressing well. It really is well underway. We expect sometime in the first quarter of calendar 2022 to have that capability up and running along with a digital marketing capability that we're building alongside the improvements to the website functionality. The digital opportunity, mobile-first, of course, integration with social channels.
We will take the product range on display up to 70% from the current 20%. We'll showcase products which customers expect to browse. The photography will be much better, much richer product information, and you'll be able to check product availability in your chosen store. Selected digital marketing activities to drive search from non-Primark terms. We'll see how much that advertising benefits us. It's all about driving conversion to purchase in store. I've said nothing about online selling. Let me then show you what I mean about richer product content. This shacket on the left-hand side, that's the picture you would find in the website today. The future you will get as you would on any good fashion website, all the information and the variety of pictures on the right.
That's where we're headed. Digital isn't just about customer facing. It's wider than that. Digital is only one of the technologies that we've been getting on and developing, and I'll come on to what I mean by that statement in a moment. Strategic investments, they are important and very significant investments to bring greater operational capabilities and to deliver safe efficiencies. The Oracle implementation is well progressed now. It will be the technology backbone of the company. It'll to support further scaling of Primark and further addition of any other digital capabilities we may wish to adopt over future years. Financials and purchase to pay are already implemented. They've been in for a couple of years.
The final phase, which is warehouse and the stock management parts are rolling out at the moment. These projects are never without risk, but we've got much of the risk behind us and it's looking good for rollout. We're also putting EPOS into all our stores. That's rolling out at the moment, and it'll be done by the end of calendar year 2022. It facilitates a consistent and improved customer experience and much more flexibility at the till than we currently possess. This other technology application is the automation of our warehouses across our markets. Roosendaal is complete. That's in Holland. It serves France. That is complete and working beautifully.
It was my first trip outside the U.K. since March last year to Roosendaal, and it is a thing of great beauty for those of us that love train sets. Brno in the Czech Republic will be finished this financial year, and Naas in Ireland, the replacement of the Naas depot, is underway. We will be automating, I think, all our warehouses over the future years. The paybacks on that work are quite interesting, and the more that we can free ourselves from needing to employ large amounts of depot labor, the happier I will be. We successfully opened 15 stores in eight markets in the past year. You are probably going to be a bit sniffy about that, but it was not a pandemic.
I think the important part of this slide isn't the number of stores, it's where they are. The Czech Republic, Wenceslas Square is absolutely flying. Another store in France, two stores in Rome, brilliant, both of them. A showpiece store in Rotterdam, second store in Poland. Four by and large smaller stores in Spain. We're rolling out smaller stores to smaller shopping areas in Spain, that's great. Tamworth, which gets on the list is actually a brilliant store for us at the moment. Four new stores in the States, two in the Northeast, one in the Midwest, in Chicago State Street, and then Sawgrass Mills down in Florida. The Florida store and American Dream are great. A couple of pictures. This is Wenceslas Square.
It's had queues outside it most days since it's been opened, partly because there are so many shoppers wanting to get in, and partly because there are still restrictions on occupancy levels. Wenceslas Square is great and no tourists. It's a domestic trade, and it's very, very strong. Philadelphia Fashion District, second store in Philadelphia, in a downtown shopping area. I think it's now the third biggest, third highest sales levels in the United States after Brooklyn and Florida. This year, and you're gonna be sniffy about this number too, we're planning to add 500,000 sq ft of additional selling space. Four stores in Italy, fantastic market for us. Four in Spain and one each in the U.S., Czechia, and Ireland.
There are growth opportunities in all our existing markets, and we have a well-resourced team of property specialists to allow us to find the sites that we need to capture those growth opportunities. There is further growth in Central and Eastern Europe. We're early days in that part of the world. But I just wanted to focus on these four growth markets, all markets which we know well now and have a really strong trading record in Iberia, France, Italy, and the U.S. Let me start with the U.S., where we have a proven profitable store model, and the whole market for us is now profitable. We're covering the overheads of the depot and the management team, and therefore, new store openings will be very accretive to our profitability.
Strong trading performance, 6% like-for-like growth in a pandemic with still a lot of mask mandates in place where we are located. The trade of the newly opened stores demonstrates that we're really resonating with the American customer. 13 stores, say 11 in the Northeast, one in Chicago, one in Florida. We've signed one, two, three, four, five, six new leases. We've got builder's boots on the ground in all these. Jamaica Avenue, which I think we've already announced, and Tysons Corner in Washington. Green Acres, I think you also know about, but three more stores in New York State, Fulton Street, second store in Brooklyn, Roosevelt Field Mall, which is on the way to JFK, and then Albany Crossgates. I'm not quite sure where that one is.
They'll all be really good stores for us. They're signed. Over the next five years, I want to lift everyone's vision from last year's store opening, this store opening, and give you a medium-term view of where we're headed. This is what we see today. The U.S. will reach 60 stores by the end of five years from now. The growth markets of Iberia, France, and Italy will reach 145 stores from the 89 we've got there at the moment, 90 once Sicily opens on the first of December. We will see growth in Central and Eastern Europe on top of that. Roughly, we estimate and we can see how we're going to get to 530 stores in five years' time from 398 from this year.
Of course, we're gonna continue to investigate other new markets as well. If you subtract the 0.5 million sq ft from that total number, you get a store opening program about 1 million sq ft a year for the out years. There are a number of reasons to believe in the further growth of Primark. The first one is the return to normalized trading. Shopping behavior is still significantly, I think, disrupted by fear of the pandemic. Tourism and holidays I mentioned are a big part of our trade in the summer in particular. Supply chain disruption will ease over time.
There are also more opportunities to increase customer loyalty, to win new customers for the brand, innovation in core product categories, extensions into new areas which I've mentioned. I think sustainability, our sustainability delivery, will attract customers to us. That digital platform work, I think is very significant in easing the shopping journey that people currently have to make. The accelerated expansion of selling space in major growth markets that we know well. We're not talking about growing in places that we haven't been to yet. We're talking about markets where we know that the brand resonates. Let me just have a quick glass of water before I move on to sugar.
The return on capital employed, which is a really important measure for us and for everyone, reached 10.2% this year. On the back of strong Illovo performance, higher sugar prices, significant cost savings once more again. The U.K. production was well down, but actually profitability wasn't too bad. The Vivergo bioethanol plant, which I'll come back to, is planning to restart in 2022. It's an important reopening for us. Just dwelling on sugar operations, we only processed 0.9 million tons of sugar. The previous year we produced 1.19 million tons. The growing conditions were the worst anyone can remember. We had dry weather when we wanted water, we had water when we wanted dry weather.
We had cloud cover and we also had severe impact in some areas, in particular virus yellows. That's in the U.K. The 2021-2022 campaign we're processing now is looking much better. Very much reduced virus yellows contamination. We think we'll get over 1 million tons of sugar. We are experiencing very significant energy cost inflation. We're hedged out for at least part of the year, but the energy bill is eye-watering. In Spain, lower volumes from the northern sugar beet crop. The southern sugar beet crop was very good. Then Illovo sugar production was good in the year, particularly Tanzania and in Mozambique. Moving on to Illovo, which is the biggest part of our sugar portfolio.
I want to say first, and give credit to a quite extraordinary response from leaders throughout the South African business, for the response and the leadership they showed in the face of really awful civil unrest in KwaZulu-Natal in particular. Villages, townships that people knew very well were on fire, and we had managers guarding their own communities through the night. The factories, which shut down for a period of time, came back up again really very quickly indeed. On top of really awful COVID infection rates, to be coping with that too was an immense challenge and I'm just in awe of them all, really, for what they achieved. Profit recovery across most parts of Illovo was very strong.
The domestic sales and regional sales were very good. The development of the retail route to market continues. We get better and better at branding and distributing sugar to the final point of purchase. We benefited from restructuring activities which reduced costs and simplified the business in many respects that we undertook last year, particularly around our head office. Well done, Illovo. Sugar prices then, just for reference, they bounced around a lot, but they've gone up a lot too. Like most commodity prices, as the pandemic started, they absolutely cratered. But with them, we're up to around the sort of $0.19-$0.20 at the moment. I don't think they'll come down much in the medium term.
I don't think Europe will produce enough sugar this year to do much about the tighter inventories in the European market. I think with very high oil prices, there'll be a lot of ethanol produced in Brazil out of sugarcane. We think sugar prices will be high for some while. We also think that ethanol prices will be high, and that's great because sometime in the early part of next calendar year, we will be reopening this beast. Of course, we intend it to be a nicely profitable venture. It achieves the equivalent. The ethanol that comes out of here will reduce the carbon produced by the U.K. car fleet by the equivalent of 260,000 cars.
Scaling that's how many fully electric cars there are in the U.K., and you won't have to build a single new car to get that saving, number one. Number two, and it's a sort of the back of the envelope calculation I just did yesterday. We reckon that energy saving is the equivalent of about 17% of ABF's total carbon output. It's a big deal. Moving on to grocery then. Revenue growth despite last year's higher sales levels. Twinings Ovaltine, we just cut and pasted the line from the last 15 presentations. We've been reinvesting some of the growth and some of the margin back into marketing in a number of places. Twinings in, of course, but also World Foods brands, Patak's and Yumi's in Australia.
We cut some of the marketing spend to save cash in 2020. We've put all that back and then more. We've had a difficult time in the U.S. Commodity oil prices went up as fast as could be, and I'll come back to that in a moment, but the margin compression in the United States. We're seeing considerable cost inflation at the moment and supply chains are difficult. On that latter one, we're managing, but it isn't easy, and the cost of it all has gone up. Twinings Ovaltine strong revenue growth, particularly in China, which we're delighted to see.
The development of the wellness tea ranges, both hot and cold, is progressing very nicely, and it's worth pointing out that for the first time ever, we are now the leading tea brand in France. Ovaltine continues to see good sales growth. They had a good sales year, Ovaltine, in emerging markets, particularly but not exclusively, in Thailand. The route to market work in Germany, which has taken us the best part of the year, is important. We've put in place our own sales force. We're no longer going to market through a distributor.
We think that Ovaltine and perhaps particularly Crunchy Cream, what we know it resonates very well in the south of Germany in particular, but, I think there's a lot of potential for Ovaltine generally, to grow, in the German market, and we've given ourselves the capability to push that growth. Let me just show you an ad some of you might have seen, already, in support of Superblends, so wellness teas.
If you had a chance to make it right, tell me the truth, would you take it? If you can go and chase your dreams, would you chase it or sit inside the office like you're flying in a spaceship? If God saw my heart, would he forgive my sins? Would he lose it and never look at me again? With all the evil all around, I'm just looking for escapes. God, open up your gate. Can you let me in? The choice is yours.
As you already know, that's Nino SLG performing Prison Walls, and promoting Twinings wellness tea. Going on with grocery and picking out some highlights, World Foods had a record sales year, reinvested the benefits of that into marketing spend, both in the U.K., but also, particularly into the U.S., where we're seeing very encouraging growth of both Patak's and also Blue Dragon. They've had a good year. Then at Acetum, where the task is to grow the Mazzetti brand, over the years, that work is going very, very well, and they've had a good year of growth on the back of good advertising, lovely packaging, and development of routes to market. Allied Bakeries saw lower sales following the exit from the Co-op. We have a new bakery partnership with a leading U.K. multiple retailer.
I'm not sure I can be any more specific than that, but it's very good news indeed. I think it's worth pointing out that Kingsmill is leading in the use of recycled material in bread bags. That's No Crusts 50/50 with bread bags using recycled bread bags. There's a limit to how much recycled material you can put next to food product, but we're there first. Grocery. Sharp increase in corn commodity prices last year. We've now got price increases. We've now got the price up to offset that. There was a gap, a timing gap, I think almost inevitably, which led to that profit compression in the back half of last year. The prices are now up.
The bakery ingredients, which boomed, of course, during COVID lockdown when Americans baked at home as well as the Brits, they're still well ahead of pre-COVID levels, so that's great. George Weston Foods in Australia, they've had a more aggressive lockdown and less sympathy shown to food production than anywhere else in the world of ABF. We've had operational disruption, particularly in the state of Victoria. We lost Dandenong Bakery for a good part of a week, just about three, four weeks ago. The meat works at Castlemaine actually are still operating with restrictions.
Shutdown for 290 days, 19 days in Melbourne has led to some really very difficult situations with some of our staff coping with the isolation that's come along from there, and there's been a focus on employee wellbeing. Coming out of lockdown for some people is as hard as going in was for others. The new animal feeds mill in Western Australia, the construction of that is well underway. Still looking good. Another year of strong growth for Yumi's, our dips business. We've made our first ad there. Great food values. It is market leader in dips in a category which is still primarily branded in Australia. Moving from grocery to ingredients. AB Mauri had a good year. Strong margin and profit growth.
All the South America, South and Southeast Asia, well ahead of previous years of the previous year. John mentioned the joint venture in China. That's great and is working. It's very important to tell you we've opened our new Global Technology Center in the Netherlands, which on my trip to see Roosendaal, I also went to visit. This is, I guess, the intellectual heart of bakery ingredients in AB Mauri. It's where we develop the technologies that will then roll out across the world. I saw a very convincing sugar-free muffin. I ate some of it too. That kind of technology, it's not easy to take sugar out of baked products, out of sweet baked products. But that work is here.
We don't think there's another anywhere in the world which has the capability that we have to invent new science and translate it into product that we've got at Etten-Leur. Staying in ingredients, yeast extracts growth in ABFI was again very encouraging, driven by flavorings for meat substitutes. Our yeast extracts have a meaty note and that obviously appeals to those people producing meat substitutes. Enzymes had a record year with growth of products for bakery, food, and the textile markets. It's technology that is important for enabling customers to improve their environmental footprint. We're working hard with the pulp and paper industry to formulate out chlorine that is currently used to bleach paper in particular, and that's a technology that's coming along nicely.
Lots of innovative new products produced at our yeast business. We've built a new pilot plant which will allow us to bring those to market into full scale production much faster than we've ever been able to before. Here it is in Rajamäki, in Finland, important facility for us. Right, on to agriculture. We benefited from higher commodity prices and good feed volumes in the U.K. as food service has returned and driven chicken volumes in particular. The higher commodity prices, the volatility of commodity prices, gave an opportunity for our trading company, Frontier, to do well, and they did. I wanted just to point out three other parts of the agricultural business which are growing well, and I think point to the future.
AB Neo is a business that specializes in technology for young animals, chicken, pigs, cattle, and it's building well, building its sales capability and the technology it possesses. China Feed last year was well ahead. They're recovering in China from African swine fever. We've opened a new mill in a place called Tongxuan in China, and I think that business has got a lot of future growth as well. We're building a new animal feed mill in the east of England. Production. There's an opportunity to consolidate factories into the new one, and also there is commercial opportunities there. Then we probably have more capability, both in arable, but also increasingly in dairy around precision agriculture.
We probably have more capabilities than almost anyone else in the U.K. market, and we think that it's going to be a very exportable know-how that we currently possess and are developing fast. Precision agriculture, again, important to allow farmers to get more out of less. Just to summarize the food businesses, we're working hard to manage the very significant cost inflation and the supply chain disruption. We're developing and, well, the geographical reach, brand growth, new products. Acquisitions have been an important part of the growth of our food portfolio over the years. Fewer of those, I think, are likely to occur with the very frothy price multiples that are evident in the marketplace as well.
We've entered auctions for a number of assets over the last 12 months and have been amazed by just what extraordinary prices others have been willing to pay for assets. Increased organic investment, though, Sugar, a major new project in Tanzania, agriculture, new feed mills in Australia and U.K., ingredients, we will be spending a lot of money improving the capability and the capacity of our yeast extract business. Grocery, we're out of capacity in a number of different areas, which we're putting right. Outlook for the group. Absent store closures, personally, I think we're unlikely to face them. Sales and profitability of Primark will improve significantly. We think that operating margin is gonna be above 10% through this year.
Cost inflation, supply chain challenges, we'll cope with them, and they'll be broadly mitigated, and we really do have a lot of confidence in the immediate term growth prospects, and I hope we've conveyed that enthusiasm to you. Food, we're working to mitigate the cost increases, and we've got to complete these investment projects. ESG, the reopening of the bioethanol plant is a great step forward, I think. The next investor briefing, which will be on the most material environmental factor of the group, I think will be March or, I think we're still trying to find a date, but it's coming reasonably soon.
We'll see significant progress for the group in adjusted operating profit and earnings per share, both at the H1 and also at the full year. I would point out to you that it is, I think it was last week, a year ago, when the U.K. shut down for the first time. We're lapping zero sales in our biggest market now. That'll drive profit, what's driving profit improvement right now. Then we think we'll generate a lot of cash again this year. Thank you. Let me have a glass of water and go on to questions.
Okay, thank you. We'll take Warwick Okines to the front.
Good morning, it's Warwick Okines from Exane BNP Paribas. I've got three questions, I'm afraid. The first is on Primark. Could you be explicit about whether your Primark margin aspiration for this year assumes no like-for-like price inflation, please? Secondly, you've made a couple of comments on inventory already, but I'm just wondering if you could say where you feel inventory is today at Primark relative to last year. Thirdly, on the capital allocation policy, it's clear that under 1x net debt to EBITDA indicates surplus cash. How should we think about the well under 1.5x comment that you also make? Are you basically saying that you feel 1x is about the right number to aim for? Thank you.
Okay. Let me just say loudly that we won't put prices up in Primark this year. We don't need to. We've got cost inflation covered by savings and by currency. Inventory, John, do you want to.
Well, actually, inventory we were a bit lower than we wanted last year. We're actually broadly in line year- on- year, but still probably not quite the stock cover that we'd like. If that makes it so. It's not one of those, we're well down this year compared to last year. That's broadly where we are.
It's very hard to tell what shortages in certain products are costing us in sales because we know that people substitute very willingly in the Primark store. You might not have a white T-shirt in your size, but there's probably another T-shirt in your size. We do have gaps in that T-shirt range at the moment. In some of women's fashion on the more sort of basic end.
Yeah. Just on the capital allocation policy.
Yes.
I think if I heard your question well, I think well below 1.5x is something that we've put out. Below 1x, we're saying, look, we're looking into the territory of surplus capital. One of the things that I do want to make very clear though, is that we don't see 1x as a target. In other words, if you saw it as a target, then you'd be saying, well, okay, if you're below it, then you would actually do return of capital to actually get back to that.
What we are saying is below one times, that's the area where the board would say, "Look, I think we've got surplus capital here, and let's consider." You know, what we'll be doing, we'll be looking at what are the potential opportunities for investment or whatever. It's not an automatic, but it's telling you that's the area where we are. Look, just to reiterate it, this capital allocation policy is new for ABF, and so it's one of the things to just highlight today. Thank you. Richard Chamberlain. Yeah.
Thank you. Richard Chamberlain, RBC. Couple of questions, please. One on Primark. I wondered how we should think about the any potential need for sort of cost to come back into the business, in particular sort of staffing.
Yeah.
Labor costs as the revenue sort of rebuilds. On grocery, Twinings, Ovaltine. I wondered if you could maybe give a little bit more color on sort of recent trends into the price mix volume and what exactly is happening to marketing cost. Did they sort of dip and then you've sort of rebuilt them? Actually are you sort of stepping that up and we might then see that now as a sort of accelerated top line because of that marketing investment?
Okay.
Thanks.
Yeah. Twinings, Ovaltine marketing spend was down last year. That was both on our request to conserve cash, but it was also because some of the marketing programs weren't ready. They've fallen into this year. Sales growth in the Ovaltine brands in particular was as strong as we've seen it for years and years. Twinings has had some specific issues in Australia and the U.K. with competitor action or fallout with customers, just the normal stuff. That's been held back a little bit by that. I think we will see the marketing spend increase somewhat, particularly new markets in Ovaltine, new products in Ovaltine, and then the wellness campaign in the U.K. Sorry, wellness campaign internationally, but starting with the U.K. and Australia.
I mean, one thing to say just about the market investment is always make sure that it's really always been at a really consistently high level for the China and Silver team.
Yeah.
The other thing to say just about the sales China and Silver team, higher single-digit growth in sales. I'm saying that number because, you know, it is such an important business for us. It had a very good sales year.
Well, I think there are two things going on in in-store costs at the moment. In some stores, we don't have enough labor. The King of Prussia store, we're running at about 60% of the ideal labor complement, whereas getting staff in the U.S. is really hard. But alongside that, there's been a very well-ordered set of efficiency programs in the use of in-store labor. I think there are further gains to come from that.
Thank you. Clive Black.
Yeah, thank you. Clive Black from Shore Capital. I just wondered if the capital allocation policy also feeds into the wider thoughts about what you acquire and what you retain within the business. Does it have implications for the broader portfolio? Within that respect, you said that returning capital is very important to the sugar business when you commented. Clearly, Primark's an immature business, but how important is returning capital to your judgment of Primark, please?
I think it is really, really important, particularly as we roll out in the States, the opportunity to commit too much capital, returning too little in America is. Well, a lot of other people have managed to achieve that. I think John and I are both bonused on Primark returns. The history of Primark rollout is that these stores start producing a really good return very, very quickly. There is no good reason. It's not as if you're building up over a five-year period of sales. What we typically see is that a new store, maybe in Italy, opens spectacularly, busily. It falls away a bit for a year while we get the trading patterns right, and then it builds again from there.
We wouldn't go near an opportunity in Primark to open a store which we didn't think had a good return on the funds invested in it and didn't have that pretty quickly. No, you shouldn't read anything into portfolio. The only right way of looking at the portfolio is everything has to be looked at on its own merit. If we don't think we can make a return on an asset in medium term, then we shouldn't have it.
One thing that I think I mentioned in my words at the beginning is we always have had quite a strict capital allocation policy within the business. You know, all capital projects, we don't just suddenly say, "Well, okay, go spend GBP 50 million," or whatever. You know, each project is looked at. In fact, somebody that helps us look at this is actually at the back of this room now. You know, we do really have a focus on return on our investments. Always have and always will, and it applies to Primark as well.
that's what's driving down the availability of M&A that makes sense. You know, people coming to you and saying, "Well, we think we can get a 15% return in year X." You just go, "No, I think we'll wait. Come on." Okay, thank you. Simon Owen, please.
Simon Owen, Credit Suisse. Can you just talk us through what the U.S. business would look like with 60 stores? Can you get it all out of Bethlehem? Does that mean a business with largely localized sourcing, etc.? If you can just kind of put a bit of color around that. Within grocery, I can notice your kind of optimism, as it were, in being able to pass through higher costs. I mean, are there any kind of black swan events that would change that? Are there any kind of commodities or situations which potentially do worry you? Just in terms of capital return, do you think the large shareholders have a preference between special dividends or buybacks?
The U.S. business, you're right to ask us about. The ideal sourcing mix for the U.S. isn't the same as the ideal sourcing mix for Europe. But at the moment, we are still sourcing for both from the same factories. In particular, I think Vietnam is a more important Southeast Asian sourcing location for U.S. businesses. Then the nearer abroad, the equivalent of Turkey for us here, is Central America. As that business grows, we will invest our time in getting that supply chain optimized.
Yeah
for the business. The management now is primarily U.S. We've grown new store managers from, you know, departmental heads and more junior than that. They're, although they're American, but they're very Primark now. I think we've now got a critical mass of stores that we can keep on promoting people that we've grown ourselves.
Yeah.
Sorry? I think we'd be stretched at that level.
No, I don't think so.
There is expansion space in Bethlehem. I mean, where we put depots over time in the States is a major, you know, working that out, it's a major bit of work. Yeah.
Let's go through, George. You asked about recovery of input inflation and then also what might be a black swan event. Let me say this sort of environment we are seeing. The pickup in inflation has surprised us. I mean, certainly over you know between reviewing our businesses over the last three months. Inflation has picked up and across a very broad number of categories. It isn't just a couple of you know commodities. It's from energy costs. We're very familiar with the gas prices here in the U.K., right the way through to packaging and so on. It really is quite widespread.
The confidence of recovery, interestingly enough, if it's a very slow level of inflation, then it's one of those things that people say, "Well, just get on with it and sort it out." When it does become bigger, you know, the industry itself has to do something about it. I think in a number of categories, that's really where we are. Then you make your views as to the strength of the brands or the business positions that we've got to enable us to actually do that. You ask about a black swan. It's an interesting question, Simon. You know, gas prices in the U.K. look pretty black swan to me. You know, where you went from 40p a therm to, at one point, getting on towards GBP 4
You know, it was like a tenfold. Now, it's come back down again. I think what we are saying is that we are abreast of that. It is something to be, you know, to be managed across the piece. I think, you know, in looking at maybe our food profitability next year, just the experience we had with ACH this year, you know, when it's going up like this, there is that lag effect. Just bear that in mind. You know, is it something that completely takes away the strength of our businesses? I don't think it does.
On the capital returns, I think at modest levels, I think Wittington's indifferent.
Okay. Thanks. Okay. Yeah, okay. I think we have some questions that are online. Anna, if you could take the first one, please.
Thank you. Our first question comes from the line of Warren Ackerman from Barclays. Please go ahead.
Yeah. Hi, John. Hi, George. Sorry I can't be there in person. But I've got a couple for you. The first one is on the 10% margin on Primark. I was wondering whether I can probe you a little bit on that. 'Cause you talk about savings on lease costs and warehouse automation. I was wondering whether you can quantify those savings. I think I'm right in saying you're hedged on freight and currency. If the H2 margin is already 10.6%, just wondering why we shouldn't be thinking about a margin that's more like 11%-12% next year. Just trying to understand the puts and takes on the margin comment for next year. Then the second one is on Central and Eastern Europe for Primark.
You mentioned a number for the U.S. and for the growth markets, but you didn't put a number around Central Eastern Europe. I'm wondering whether you're able to do that. Just finally on the like-for-like, I know it's only six weeks data, but it does seem like Spain and the U.K. have picked up a little bit. Can you talk about how Spain is trading in the last few weeks? Thank you.
Okay. Do you want to address margin first of all then?
Yeah, look, we get a number of lease renewal events every year. Our experience over the last couple of years has been that lease costs have come down significantly at those lease events. I think there's a following wind of lease cost reduction. We do have, in many cases, quite long lease terms.
We'll see it over a number of years.
Yeah.
Compared to maybe a few other retailers that have talked about this, and I'd say I think they've got a shorter period with more in. I think ours will be, it's coming, but it will be over a longer period of time compared to those.
The automation projects give us a very good return. We can't do, I think we'll struggle to do more than one at a time.
Okay.
Again, following wind, but it'll take time to come through into the margin. I don't doubt that there will be other increases in distribution and warehousing costs that will offset some of that saving.
George, if I could just say one thing.
Yeah.
Everybody asks us constantly about sea container freight.
Yeah.
Just to say that we have basically contracted. The guidance we are giving you is with costs that we know to October 2022.
Okay, right. There are other costs in fabric in particular that by and large aren't in the H1 numbers because we're contracting six months in advance, but will begin to come through later on in the year. We hope that the agricultural commodity prices will be a blip, and they'll return to more like normal levels in due course. Central Eastern Europe, maybe 40 stores. We're less certain about those areas because we're newer into them. Then you asked a question about Spanish performance. Absolutely thrilled that last week we had positive like-for-likes in Iberia for the first time in a long while, but it was the first
Is that mainly a comp effect, George? That improvement in Spain, or was it an underlying improvement?
Sorry, I'm just translating the word comp. Yes, it's two-year like-for-like.
Yeah.
It's the seasonality is the point as well.
Yes. Also, you know, we're past the tourist season, so the drag of that in the numbers has been largely removed, so it's sort of domestic trade. It was great to see Gran Vía up at, I think, in the sort of mid-90s% like-for-like two-year like-for-like.
Great. Thanks. Okay.
Thank you.
Thanks. Thanks, Warren. Can we have the second one, please? It isn't Anna, it's the gentleman on the who's the moderator.
Thank you very much. We now have Georgina Johanan from JP Morgan. Please go ahead.
Hi. Good morning. Thanks for taking my questions. Three from me, please. The first one was just on the digital initiatives that you're talking about for Primark. Where you talk about sort of being able to give the consumer the range availability, are you talking about, like, a live stock availability on the website, or is that more about what ranges are available in which stores? And am I right in understanding that we really shouldn't be expecting any sort of click and reserve initiative or anything in the next, say, 12 - 18 months? That was the first one, please. The second one was just following on from the prior question. Are you able to give a sense of where those like-for-likes actually are trending on a sort of two-year basis at the moment, please?
I think the exit rate from Q4 was around -10%, so is it fair to assume that it has improved since that exit rate as well as the kind of overall Q4 quarter? Then my final question was just a bit broader, thinking about as we go into a period of sort of inflation in food and, you know, essential items in particular, how would you expect your consumer to react to that when you look at history, like perhaps going back to 2011? Do you know, do you think they will actually be spending more with you or do you think that they will actually end up spending less because of that pressure on essential items? Just any sort of high level thoughts on that would be really appreciated. Thank you.
Georgina, I'm not sure that we got every part of that, but if I'm right.
Was it size, availability? Yeah, so I think Georgina, I thought your first question was about what will the website give in terms of your, the consumer's understanding of what's in store.
No, we intend to tell consumers whether a style is ranged in the store that they ask about. That will be the limit. We think that giving size availability isn't possible given the rate of sale of stocks on busy days.
Yeah.
In particular. That would require RFID technology, which we're not planning to invest in at the moment. Click and reserve, no. This is about information for customers, and we think that it's a good end in itself. John, do you want to pick up the two-year like-for-likes?
The two-year like-for-likes. You know, Georgina, we've had six weeks of trading in the new year. I really do come back to, you know, I am incredibly loath to give only because we're seeing a lot of volatility in like-for-likes. It isn't like I just don't want to say. It's. I just think I'm always worried about the thing being misleading over such a short period of time. Let me put it. It depends on which week you're looking at or whatever. The trend has improved over those six weeks. Let me just put it this way, the last few weeks better than the exit rate for last year as well.
If you asked about the -17% for the quarter, the exit rate was -11%. It's better than both.
Rather marvelously, last week was good because of weather. We haven't talked about weather affecting this business for the longest time. It was
Welcome back, weather.
Welcome back, whether. Consumer reaction to inflated food prices typically people save, they try to economize, and they do so in two ways, what they buy and where they buy it are the big ones. Multi-buys become much less attractive to people whose budgets are stretched. They look for discount ranges in discount outlets. Sadly, for all too many families economize by cutting down on fresh fruit and vegetables.
Thank you. We've got, I think a couple more questions. We can take the next one, please.
Thank you. Our next question comes from the line of Elena Mariani from Morgan Stanley. Please go ahead.
Hi. Good morning, George and John, and my apologies for not being there in person. A couple of questions from me as well. The first one is on your like-for-like, but more like the medium-term like-for-like profile, because pre-pandemic, you know, you were running at a slightly negative like-for-like for a couple of years. Now you have a pretty nice and ambitious store rollout plan. Are you confident on the fact that you're gonna be able, over the medium term, to expand in all these countries, and then at the same time being able to maintain a positive like-for-like over the medium term? That's question number one. My question number two is a little bit more high-level.
I just wanted to know whether you believe that the volatility of Primark sales over the past year was uniquely due to the COVID-related restrictions and situations overall, or whether you believe that perhaps you might have lost some market share to other players given that the apparel market is becoming more competitive, particularly online. Undoubtedly, there has been some permanent shift to the online channel. I just wanted to understand how you're thinking about this and the market share developments for Primark. Thank you.
Elena, if I can frame the first question, maybe George you want it. You're asking, we did have a trend of like-for-likes that were negative in the lead up to 2019. George, you may want to talk about that. In fact, my recollection would've been one of very small negative in the U.K., but maybe -1% or something. Then there was that very big negatives in Germany, and you remember we were looking to address those. George, if you wanted to.
No, I think that's right. I look, there's a reason that we've emphasized the point that we haven't reached post-pandemic normality. I think we'd be guessing if we said with any certainty what our belief. I don't think we'd be honest if we said where this is all gonna end up. There's a lot more capacity online. People have shopped online throughout. We're seeing something like 40-odd% of all clothing now still in the last period according to our data bought online. Will that go down? I think so. But I think we're able to sort of wait and see. We were one of the very few clothing retailers who were shut through the second pandemic through the second lockdown.
Yeah. Yeah.
Even my garden center got into selling clothes. The supermarkets put extra space in. All sorts of people who had never sold clothes before got into the world of selling clothes. I think we'll get most of that trade back. It'll take time, but I think it'll come back to us. I think over the next 12 months, certainly the much bigger effects are going to be holidays returning, confidence returning in people's views of the risk of going to the high street, and then tourism coming back. In the longer run, we know we've got great growth prospects in these four growth markets, and we will do our best to retain our market shares in the U.K.
If I could just add to that point, I mean, I think just given the scale of the disruption to Primark stores, to actually come back the way that the Primark stores have said something about, you know, customer loyalty. Yeah, Elena, of course, you're right. There's been a huge amount of change and churn in probably the U.K. Probably the U.K.'s been one of the most disrupted in where it is. But for me, you know, the promise of Primark, I think the addressable market for Primark is the whole of the apparel market. It isn't the offline market, which is reducing, and I think that is a key, and that's the way we look at it.
I'd also add two things that we mentioned in the presentation. We know we're losing shoppers in their online journey. We can get quite close, we think, to having a fair stab at just how many people drop out of our network because of the incapacity in the supply in the digital offering that we have, and we're putting that right. The second one is we know we're losing shoppers who don't think that we are as sustainable in our clothing selections as we would like them as they would like us to be. Again, that's why Primark Cares really is a consumer-facing proposition that's important to us. We think that those Primark Edit collections, that's all new stuff. Home is new stuff.
There are sources of growth, alongside challenges, because of changes in some people's shopping habits.
Right. Thank you. Can we take another question?
Thank you. Our next question comes from the line of Adam Cochrane from Deutsche Bank. Please go ahead.
Hi. Good morning. Just three quick questions given the time. You talked about only 70% of the range being available to see online. I just wondered why it's not 100%. Secondly, you talked about not wanting to invest in RFID. Now, a number of other retailers have, I would say, gone on at quite length about the benefits of RFID. I just wondered why you thought that the cost-benefit analysis for RFID was not worthwhile. Then finally, I think you've probably answered some of this, but are the town center locations the drag that we were seeing before? Is that drag getting slightly less on the overall group at the moment? Thanks.
Okay, Adam, thank you. We're not gonna put 100% on because people don't want to know that there's underwear and socks available in Primark. They already know that. Let's not clutter up their website with stuff that they don't want to see. RFID, we keep a very close eye on it. It's about cost benefit. At the moment, we think it's still too expensive at our price points, number one. Number two, some of the functionality is not yet where we would need it to be in order for us to make good use of it. Then town centers are still a drag, but less so. It's the big destination stores which are the drag.
While some town centers are fine, it's the Oxford Streets and the Alexanderplatz of the world, which are the drag.
Yeah. Thanks, Adam.
Take one last question, please.
Thank you. The last question comes from the line of Anne Critchlow from Société Générale. Please go ahead.
Good morning and thanks for taking my question. Just one from me, please. I'm just looking at the 530 store targets you have for 2026, and if it's 1 million sq ft a year, then the store size would be quite a bit smaller, so about 33,000 sq ft, you know, compared to the 45,000 you had last year. I'm just wondering whether it's going to be smaller stores going forward or you're going to be putting down more like 1.3 million sq ft a year. Thank you.
Okay. No, it's a very good question. Firstly, you probably know I don't like the word target. It's what we can see at the moment rather than being a target. You're absolutely right. The smaller stores are driven by the infill strategy in Spain and smaller stores in the States. We'll be opening bigger stores, I'm sure, in Italy than that 33,000 average. But given how much of that new space will be the two markets of U.S. and Spain, it pulls the numbers down. We opened in Vigo just recently, and I think it was 25,000. Yeah. Okay, good. I think at that point, thank you very much, everybody, for your attendance this morning. Thank you.
Thank you.