Primark has reported surging sales as it stemmed its declining profit margin with lower markdowns.
Operating profit margin dropped from 11.7% in the first half of last year to 10% in the first half of this year as a strengthened dollar affected input costs.
The group had expected that margin would be further eroded in its second half as advantageous currency hedging came to an end but was able to temper this decline with fewer markdowns and improved input margin mitigation.
It now expects the full-year margin and rate of decline to be in line with first half numbers.
Sales rose 13% in the 40 weeks to June 24 in constant currency driven by both a 13% expansion in selling space and like-for-likes. Actual exchange rates were 21% ahead as Primark benefited from the weakness in sterling.
Over the last 16 weeks, sales grew 15% in constant currency and 21% at actual exchange rates. The business benefitted from weak comparables because of the fall of Easter and last year’s poor weather.
Primark said that, consequently, like-for-like were higher than in the first half of the year.
UK sales are 9% ahead of the previous year, with market share increasing in the period.
Primark expanded by 1.3m sq ft over the 40 weeks to 339 stores comprising 13.6m sq ft selling space.
It opened 10 new stores in its third quarter including Uxbridge and Llandudno in the UK; Granada and Tarragona in Spain; Charleroi in Belgium; Zwolle and Hilversum in the Netherlands; Florence in Italy and Staten Island, New York and South Shore, Massachusetts in the US.
The business added that early trading was “good”, particularly in Florence and the US.