- Sales expected to be up 7.5% at constant currency
- Like-for-likes have been improving
- US business off to an “encouraging” start
Sales at value giant Primark are expected to be 7.5% up on last year in the first half, despite a challenging Christmas.
In a pre-close update ahead of its interim results, Primark parent ABF said the value fashion retailer’s rise in revenue at constant currency came on the back of an increase in selling space.
At actual exchange rates, the increase is expected to be 4%.
After a strong start to the financial year, Primark’s “trading was weaker in the weeks leading up to and over Christmas as a result of unseasonably warm weather across northern Europe”.
However, cumulative like-for-like sales have improved since the business last updated on trading in January “and are expected to be level with last year in the first half after better trading during the period since then”.
John Bason, finance director at Primark’s parent company Associated British Foods, said: ”The sentiment here is that there is a better outlook. January was a really good month for Primark, it draws a line under the unseasonably warm weather and what it did to like-for-likes before Christmas
“I am not concerned by flat like-for-likes. We are all aware how unseasonable the period up to Christmas was. We are really rather pleased to come out level after that sort of unseasonable weather.”
Trading in France was “buoyant with strong like-for-like sales despite the very high sales densities achieved by these stores in their first year of trading”.
The effect of new store openings on like-for-likes in existing branches in Germany and the Netherlands has “eased”, ABF said.
Bason was tight-lipped on a possible Brexit. He said: ”ABF has a policy of not commenting on political issues. And I am not going to change that. But I will say that operations in Italy and France will remain the same.”
Trading at the two newly opened stores in the US has been “encouraging”. Bason added: ”The breadth of our range has been very favourably received - that really hits people. Our price point is doing very well too. We are still learning lessons, as we always knew we would be.”
Primark’s operating profit margin has been better than expected, “with much of the impact of the stronger dollar being mitigated by a good buying performance and a lower level of markdowns arising from a well-managed stock position”.
By the end of next month Primark will be trading from 299 stores comprising 11.5 million sq ft of retail selling space.
Primark expects to open 1.4 million sq ft of new selling space in the current financial year.