Primark’s finance boss remains confident about UK expansion despite admitting that the fashion market is “weak”.

John Bason, finance director of Primark’s parent Associated British Foods, told Retail Week that despite lacklustre trading conditions in apparel retail there are still “a number of years of growth in selling space” in the UK.

Primark’s interim like-for-likes edged down overall, although by less than 1%, for the first time in 12 years in the 24 weeks to February 27.

According to Bason, the UK suffered negative like-for-likes but not to the same extent as Germany or the Netherlands. Both of those European markets are recovering from the effects of cannibalisation initially suffered when Primark expanded rapidly.

“UK like-for-likes were down a bit, but only a little bit,” said Bason. “Against a background of a market that was tougher for other retailers than it was for us, we were pleased with that.”

He said that if the Netherlands and Germany were removed from the equation, like-for-likes had increased by 1% overall helped by strong performances in France, the Republic of Ireland and Spain.

Bason said that he was “really pleased” with Primark’s results. Sales rose 5% at actual currency and 7% at adjusted currency rates. Profits fell by 3% in actual currency and 1% adjusted.

The Primark method

Bason was resolute that Primark’s approach was not to chase margin growth, despite a small margin decline in the period.

He said: “Primark is not managed for net margin. Have we got sustainably profitable business at this margin level? Absolutely.

“It is not about getting margin back up again, it is about growth. Primark is about price points. A lot of classic retailers would say that they would protect their margin by cutting costs or putting prices up.

“But Primark has growth coming from huge markets which are immature, we have lots of selling space we can add. Can we get a business which is double or treble size at our current margin? Yes.”

He said: “If you had taken the gross effect of movement in the euro and dollar, profits would have been down way more than the small decrease that we actually saw. Margin decline could have been much, much more than it was.

“We mitigated that by good buying and by capturing the reduction in cotton prices and freight. We were faced with slower sales than people might have expected in lead up to Christmas but Primark stands out as not having a stock problem as we came into this year, as evidenced by its fewer markdowns.”