Value fashion giant Primark has reported a strong sales rise but currency movements are expected to affect next year’s results.
- Sales rise 13% on constant currency basis
- Impact of currency movements will become more significant
- Plans well advanced for US launch
Primark owner Associated British Foods (ABF) reported that the retailer’s sales, on a constant currency basis, rose 13% in the 40 weeks to June 20.
The performance came on the back of an 8% increase in selling space and “very high sales densities in stores opened in the last year”.
The weakness of the euro against sterling meant that at actual exchange rates sales rose 9%.
ABF, which operates other businesses including Twinings and British Sugar, cautioned: “The impact of currency on results for the next financial year will be more significant than this year and arises from transactional currency exposures, primarily in British Sugar and Primark.”
ABF said: “Primark sources much of its merchandise in dollars and as already indicated, the US dollar’s strength, particularly against the euro, will have an adverse effect on margins in the new financial year.
“However, as anticipated, a good proportion of the impact has been successfully mitigated by our buying teams as they firm up orders for next year.”
Primark has been expanding rapidly in Europe and is about to open up to three shops in Italy. The first will open in summer 2016 in Arese, northwest of Milan.
In September this year Primark will launch in the US. Preparations are “well advanced” for its debut at Downtown Crossing in Boston.
On a like-for-like basis, Primark’s sales in the most recent 16 weeks “were in line with last year’s very strong comparatives” but “held back” by the effect of new store openings on existing stores in the Netherlands and Germany.