- Prachi Singh |
Providing an update prior to entering the close period for its full year results for the 52 weeks to September 19, 2017, Primark, part of the Associated British Foods said that sales are expected to be 13 percent ahead of last year at constant currency and on a comparable week basis, driven by increased retail selling space and 1 percent growth in like-for-like sales. On the same comparable basis but at actual exchange rates, sales are expected to be 20 percent ahead.
The company added that with most of next year’s first half UK purchases contracted at the weaker sterling/US dollar exchange rate than the same period last year, there will be an adverse effect on margin in the first half. However, the strengthening of the euro against the US dollar in recent months will have a beneficial transaction effect on Primark’s eurozone margins particularly in the second half of next year if these rates prevail.
UK sales expected to witness a 10 percent rise
The company said, Primark has performed particularly well in the UK where full year sales are expected to be 10 percent ahead of last year on a comparable basis. After a good first half, third quarter trading was particularly strong in the lead up to Easter, benefiting from comparison with prior year results that were affected by poor weather and an earlier Easter holiday. It added that favourable weather in the fourth quarter and the strength of its consumer offering resulted in markdowns at lower levels than normal and early trading of the new autumn / winter range has been encouraging.
In the US, the company continued fine tuning its ranges, opened three stores during the year and extended the Downtown Crossing store in Boston by 20percent increasing it to 92,000 sq ft. Primark’s ninth store is scheduled to open next year in Brooklyn, New York.
The first half operating profit margin of 10percent declined from 11.7percent in the first half last year, which the company said reflects the strength of the US dollar on input costs. However, with the benefit of input margin mitigation and lower markdowns, the company now expects the full year margin to be better than the first half.
Primark continues to expand footprint
Primark said in a statement that 1.5 million sq. ft. of selling space and 30 new stores were opened across nine countries during the period under review. This brings the total estate to 345 stores and 13.9 million sq. ft. at the financial year-end. Eleven stores were added in the UK; three in each of Spain, France, the Netherlands, Italy and the US; two in Germany and one each in Belgium and Ireland.
The fourth quarter saw the addition of 0.3 million sq. ft. with four stores added in the UK, our fourth Italian store in Verona and one in France in the Val d’Europe shopping centre close to Disneyland, Paris. Its city centre flagship store at Oxford Street East was extended by 40 percent during the year, increasing it to 114,000 sq. ft. The stores in Sheffield and Reading were relocated to bigger, better locations and two stores have been temporarily relocated while their existing sites are redeveloped.
In the next financial year, the company plans over 1.2 million sq. ft. of additional selling space. France, Germany and the UK will see the most space added and overall Primark will open 19 new stores together with a number of relocations and extensions. The larger stores will be in Stuttgart and Munich in Germany; Toulouse and Bordeaux in France; and Antwerp in Belgium.