• Primark operating profit grew 2% to GBP154m
  • Sales increased 15% to GBP1.6bn
  • Like-for-like sales rose 2%

Value fashion retailer Primark has continued to record robust growth with sales up 15% in the first half, and says it expects profit growth to accelerate as cotton prices ease. 

The retailer's parent company Associated British Foods (ABF) today (24 April) said the group saw like-for-like sales in the six months to 3 March rise 2%, with total revenue reaching GBP1.6bn. Operating profit was up 2% to GBP154m.

Over the past 12 months, the retailer has added some 1m square feet of selling space, with trading in the new stores, particularly in continental Europe, exceeding expectations.

The company said operating profit margin over the half was lower than last year due to its decision to absorb higher cotton costs instead of passing them onto consumers.

It emphasised it has now sold through the inventory bought when cotton prices were at their highest point - and now expects profit growth to accelerate as thanks to lower cotton prices, increased selling space, and strong trading from new stores.

In the first half of the year, the retailer opened ten new stores, including three in Spain, three in Germany and two in the UK. It plans to open a further six stores in the second half, with four in Spain, one in Germany and one in the UK.

ABF's consolidated profit before tax (which includes its sugar, agriculture and grocery operations) was up 3% to GBP329m, while revenue increased 11% to GBP5.7bn. Operating profit increased 6% to GBP378m.

"The group delivered good growth in revenue and profit," chief executive George Weston said. "AB Sugar and Primark both performed strongly, demonstrating continuing momentum. We expect substantial growth in both adjusted operating profit and adjusted earnings per share for the group for the full year."

Conlumino analyst Simon Chinn said that Primark's low price points and fashion- forward ranges "appeal to the price sensitivity of consumers amid the current austerity drive".

"With Primark expanding its presence in Spanish cities, many consumers are deserting other low price clothing stores in favour of Primark, which provides all the clothing needs of the family at a low cost," Chinn said.

"Of the six stores it plans to open in the second half, four will be in Spain, which will help it further grow share in the Spanish market, even as overall clothing spend in the country continues to fall."