Primark to boost full year profits at Associated British Foods
Associated British Foods has reported that at sharp rise in sales at its Primark fashion chain will boost its full year profits and offset a weaker performance at its sugar arm.
The group said sales at Primark for the year to 13 September are expected to be 17% ahead of last year at constant currency and 16% ahead at actual exchange rates.
The increase was driven by a rise in retail selling space, expected like-for-like sales growth of 4.5% for the full year, and superior sales densities in new stores.
The group said its “highly successful” autumn/winter and spring/summer ranges contributed to the like-for-like sales increase as did strong Christmas trading and warm weather in the spring and early summer.
Primark’s operating profit margin of 13.1% in the first half was higher than last year reflecting the benefit of warehouse and distribution efficiencies and lower freight rates. ABF said the strong trading over the summer, which resulted in a low level of markdowns, meant that it now expects the margin for the full year to be slightly higher.
ABF said it will have opened 1.4 million square feet of selling space in 28 new stores during the current financial year, the most recent openings being Alexanderplatz in Berlin, Bath in the UK and Enschede in the Netherlands. This will bring the total estate to 278 stores and 10.2 million square feet at the financial year end.
Primark is also planning to open its first US store in Boston late next year. The group said: “We announced in April that, after extensive research, we had decided to take the Primark concept to consumers in the north east of the US. A lease for some 70,000 sq ft of selling space at Downtown Crossing in the heart of Boston, Massachusetts has been signed and we expect this store to open in late 2015.”
Negotiations are also underway to secure further stores in the north east of the US with the aim of trading from up to ten stores by late 2016. The US stores will be supported by leased warehousing in the region.
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