Store growth boosts Primark sales - Just Style
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Store growth boosts Primark sales

By Giacomo Lee 04 Jul 2019

Store growth boosts Primark sales

The expansion of its store portfolio both at home and abroad has helped UK value clothing retailer Primark to higher sales in the first ten months of the year.

In the 40 weeks to 22 June, sales were 4% ahead of last year at constant currency and actual exchange rates. However, Like-for-like sales were held back by unseasonable weather in May, which compared to a favourable market environment in the corresponding period last year.

Owner Associated British Foods (ABF) said Primark recorded a further “significant” increase in market share. The retailer also noted it has seen an improvement in sales in June, with strong trading at its stores.

Sales in the Eurozone, meanwhile, were also affected by the unseasonable weather in May but trading recovered strongly in June. Sales growth was delivered in Spain, Portugal, France and Italy, but trading continued to be weak in Germany.

Primark’s business in the US continued to deliver encouraging like-for-like and strong total sales growth, ABF said, adding it expects to open additional stores over the next 12 months.

First-half operating profit margin of 11.7% was well ahead of last year’s 9.8%, driven by a weaker US dollar on contracted purchases, better buying and tight stock management. While ABF has already advised that the effect of a stronger US dollar on purchases will reduce margin in the second half, it now expects a higher offset from better buying and lower markdowns. Its full-year outlook is for a year-on-year increase in margin. 

Meanwhile, retail selling space increased by a net 0.8m sq ft since the beginning of the financial year, with 372 stores trading from 15.6m sq ft of retail selling space.

Winning combination

Chloe Collins, senior retail analyst at GlobalData, notes Primark’s fast fashion, value offer continues to prove a winning combination and the retailer remains in a good position to overtake M&S as the UK’s clothing market leader in 2019.

“Primark’s new flagship store in Birmingham – which opened in April – has exceeded expectations, with positive reactions to the in-store beauty bars and cafés.

“With negative like-for-likes, Primark must continue to introduce leisure services into more of its estate, with unique appeal necessary to continue to boost footfall. The response to Birmingham’s fuller product range has also been strong, with the offer including more stationery, toys and technology than its usual sites. With this wide assortment, Primark has the potential to steal sales from general merchandisers and the struggling department stores Debenhams and House of Fraser, and should start to expand these categories in more stores to aid growth.”