Primark owner Associated British Foods (ABF) has raised its second-half profit expectations after strong summer sales at the fashion retailer.
ABF said “adjusted operating profit for the second half will be ahead of expectations delivered by a strong finish to the year from Primark”.
Analyst Panmure Gordon adjusted its EBITA forecast for Primark from £473m to £505m in a buy note today. The retailer last year reported operating profits of £356m.
The retailer expects total sales in the year to September 14 to be 22% ahead of last year’s £3.5bn, while like-for-likes are expected to rise 5%.
In a pre-close statement, Primark said: “This excellent result was driven by an increase in retail selling space, like-for-like sales growth, which we expect to be close to 5% for the full year, and the superior sales densities in the larger new stores.”
Primark will have 257 stores and 9 million sq ft of selling space at year end.
Primark added: “Like-for-like sales growth in the first half was flattered by an exceptional start to the year with the benefit of seasonal autumnal weather in 2012 compared with an unseasonably warm autumn in 2011. In the second half, although growth was subdued during the very cold months of March and April, trading during the summer months was strong and built upon the success of the same period last year.”
The retailer said trading in its stores in northern continental Europe has been strong throughout the year and like-for-like growth in Spain, which was initially held back by the large number of new store openings, has improved.
Operating profit margin in the first half was higher than last year reflecting the benefit of lower cotton prices and lower markdowns. Strong trading over the summer also resulted in lower markdowns and the second-half margin will now be in line with the first half, the retailer said.
Primark will open its first French store in Marseille in December. It will report its full-year results on November 5.