Primark first half sales impacted by October’s warm weather
Associated British Foods has said sales at its Primark fashion chain are expected to be 7% up year-on-year at constant currency in the first half of its financial year.
At actual rates, sales in the 24 weeks to 3 March are expected to rise by 9% with the uplift driven by an increase in retail selling space.
Meanwhile, like-for-like sales are expected to decline by 1% in the period after growth was held back by unseasonably warm weather in October.
However, like-for-like sales for the 16 weeks to 3 March are expected to rise by 1% following strong Christmas trading.
The company said Primark is performing particularly well in the UK with sales 8% ahead of last year. This was driven by a 4% uplift in like-for-like sales and an increase in selling space.
ABF has reported that Primark’s operating margins are expected to be close to those in the same period last year with better buying virtually offsetting the adverse effect of the US dollar exchange rate on purchases.
Primark opened seven new stores in the period including shops in the UK, Germany, Portugal and France. In addition, there were two relocations in the UK.
In addition, new stores are planned for Toulouse and Metz in France, Munich in Germany, Antwerp in Belgium and Valencia in Spain. It will also open its ninth store in the US in Brooklyn, and a new shop in the Westfield London shopping centre at London’s White City.
Looking ahead ABF said: “We expect an acceleration in Primark profit growth in the second half as a result of an improvement in margin over the same period last year. This will be driven by better buying and some benefit of the recent weakness of the US dollar on purchases which will more than offset an expected return to a more normal level of markdowns, compared to the very low level achieved last year.”
