UK value fashion retailer Primark this week reported a double-digit revenue rise for the first half of the year, with European openings making up for domestic pressures.

The company said its first-half revenues grew by 11% thanks to new store openings and a 3% rise in like-for-like sales, but warned of "continued weakness" in the UK retail market.

Revenue reached GBP1.4bn (US$2.3bn) for the 24 weeks ended 5 March, up from GBP1.26bn in the same period last year. Operating profit, meanwhile, rose 4.9% to GBP151m, from GBP144m.

Primark said its performance in Continental Europe was "very encouraging", but that following a strong start to the financial year, trading in the UK weakened after the New Year. It added, however, that performance has improved since the end of February.

Here's what the analysts say about Primark's latest results:

Shore Capital analyst Clive Black: "Many of the questions at the analysts’ meeting understandably focused on Primark’s performance given that this is where the H2 margin surprise has largely emanated. To us, Primark delivered a more than sound performance against the tough UK consumer back drop. Total sales increased by 13% at constant currency and like-for-like (LFL) revenues rose by 3%, the latter a very creditable performance to our minds given the worrying weakness of January & February trade in the UK & Spain.
"Primark seeks to trade hard and invest through the downturn in its markets, a strategy that will by definition impact near term profit performance but to our minds does position it effectively for the medium-to-long-term. As such we see it as the right thing to do, especially against competitors facing demonstrably challenging conditions too. In pushing for volume growth over margin protection, Primark should therefore gain share and provide the best basis to harvest the benefits of improved market conditions and so volumes in due course."

AllianceBernstein Research analyst Andrew Wood: "Primark’s sales performance was good, although margins were disappointing. Like-for-like growth of +3% was in-line with our estimate of +3%, as was reported sales growth of +11% vs. our +11%.

"While sales performance was generally healthy, although showing a deceleration from 2010, operating margin contraction of -65bps came in considerably below our estimate of -15bps, highlighting margin pressures that are likely to accelerate in H2. Indeed, management indicated that H2 Primark margin was likely to be “lower than previously planned”."

MF Global analyst Andy Smith: "ABF has released a bearish 1H11 results statement. The outlook statement is negative with lower margins guided to in fiscal 2H11 at both Primark and the Sugar division.

"We continue to see headwinds across most of ABF's businesses. Primark LFL was +3% in 1H11 with a sharp sequential deceleration to +1% in fiscal 2Q11. Higher cotton prices continue to be a headwind for Primark, with the continued focus on price leadership resulting in margin decline in the half (-66bps). Profit for the sugar businesses will be held back in the second half by the lower volumes produced."