Primark has hailed a jump in full-year sales and margins after the latter was driven up by lower markdowns.
The value fashion chain had previously guided that margins, which declined to 10% in the first half of this year, would erode further during the last six months of its financial year due to less advantageous hedging.
But today it said that despite less favourable exchange rates, it expected margin to improve during the second half as a result of lower markdowns and input margin migration.
Full-year group sales are expected to be 13% ahead of last year on a constant currency basis, the retailer’s parent company Associated British Foods said in a pre-close update covering the 52 weeks to September 16.
Primark said the sales rise was driven by an increase in selling space and a 1% upift in like-for-likes.
At actual exchange rates, sales are expected to jump 20%.
Primark said its UK sales would be 10% up on a constant currency basis.
The group insisted its share of the British market had “increased significantly” and said a good Easter trading period, favourable early summer weather and lower markdowns contributed to growth.
In the US, Primark expanded its Boston Downtown Crossing Store by 20% to 92,000 sq ft and is due to open a store in Brooklyn, its ninth in the country, next year.
Looking ahead, Primark warned that margins would be negatively impacted in the first half of its 2017/18 financial year because most of its UK purchases had been made at a weaker exchange rate against the US dollar.
However, Primark’s Eurozone territories, which have performed well in recent years, should benefit from the strengthening of the euro.
This year, Primark expanded its estate significantly, adding 1.5 million sq ft of selling space and 30 new stores across nine countries.
The retailer now trades across 13.9 million sq ft in 345 stores. It plans to add 1.2 million sq ft and 19 stores next year.