UK: Primark plots expansion after Q1 sales hike
Value clothing retailer Primark is planning to expand its store base further after recording sales up 14% in its first quarter.
The company, owned by Associated British Foods (ABF), was the highlight of a period in which group revenues were flat, and up 1% at constant currency rates.
Primark sales rose 12% at constant currency rates, but benefited from the weaker pound to post a 14% reported increase for the 16 weeks to 4 January.
ABF said the growth was driven by an 8% increase in selling space, as well as strong like-for-like growth and higher sales densities from new stores.
“Although like-for-like sales in the first eight weeks were held back by the unseasonably warm weather and the strong comparatives in the previous year, the second half of the period was characterised by excellent Christmas trading with very strong like-for-like growth,” the company added.
Operating margins were up, reflecting buoyant Christmas trading, and were better than expected.
Primark opened 14 new stores in the period, including its first in France, and plans to open another four outlets in France during the current financial year, alongside two in Germany and three in the UK.
ABF said Primark profits were expected to be “well ahead” of last year.
In a note, Panmure Gordon analysts Graham Jones and Damian McNeela highlighted Primark’s “fantastic looking” Christmas trading performance, with estimated like-for-like sales up 8%.
Anusha Couttigane, senior consultant at Conlumino, said: “Primark’s escalating store numbers and growing consumer reach in key economies, both here and on the continent, are making it an increasingly convenient and attractive place to shop.”
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