Primark broke the £1bn sales barrier in its first half but has warned of increasing pressure on margins.

In the 24 weeks to February 28, sales at Primark – which is owned by Associated British Foods – rose 18 per cent to £1.06bn on profits up 10 per cent to £122m.

The sales uplift reflects an increase in selling space to 5.6 million sq ft. Like-for-likes were up 5 per cent.

However, operating profit margins were dented by higher overheads following the opening of its distribution centre at Thrapston, Northamptonshire. Margins will come under increased pressure during the second half from the effect of the weakness of the pound against the dollar.

Panmure Gordon analyst Graham Jones said Primark was “weathering the retail storm well”. He said: “Although we expect margins to be impacted in the second half by the weakness in sterling, we believe the effect will be modest as there is some mitigation from lower supplier prices and lower freight costs.”

At the end of the period, Primark traded from 187 shops. It will open seven in the second half, including its first in Germany and Portugal.