Primark first half profits up 26%
Primark increased its operating profit by 26% to £298 million in the first half of its financial year to help offset a fall at owner Associated British Foods sugar business.
In the 24 weeks to 1 March 2014, the retailer's revenue grew by 14% to £2.278 billion driven by 4% like-for-like sales growth.
ABF said like-for-like sales at Primark in the first eight weeks of the financial year were held back by strong comparatives in the previous year but the rest of the period, including Christmas, saw “excellent trading”.
The retailer’s stores in Spain and Portugal achieved double-digit like-for-like growth while trading in stores in Germany, the Netherlands, Belgium and Austria was “very strong”.
In addition, Primark’s operating profit margin of 13.1% was higher than in the same period last year as the retailer benefited from warehouse and distribution efficiencies and lower freight rates.
During the half year, Primark increased its retail selling space by 0.6 million sq ft and at 1 March was trading from 269 stores and 9.6 million sq ft of selling space. The retailer opened 16 new stores across Europe in the period, including three in the UK.
Primark expects to add a further 0.5 million sq ft of selling space in the current financial year and has also unveiled plans to open its first store in the US in 2015.
Across the wider ABF group, revenue fell by 2% to £6.2 billion while pre-tax profit rose by 4% to £468 million.
ABF chairman Charles Sinclair said: “Lower sugar prices will result, as previously indicated, in a substantial reduction in profit from Sugar this year and the current strength of sterling, if maintained, will have a greater impact on translation of overseas results in the second half.
“However, as Primark builds upon the success achieved in the first half and with further store expansion planned for the remainder of the year, Retail profits are expected to be well ahead. When combined with improvements in Grocery and Ingredients and a lower interest charge, we continue to expect adjusted earnings per share for the financial year to be similar to 2013.”
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