Business

Retail expansion drives sales growth at Primark

by Prachi Singh
9 Sep 2019

Sales at Primark, part of Associated British Foods plc, for the full year are expected to be 4 percent ahead of last year at constant currency and actual exchange rates, driven by increased selling space partially offset by a 2 percent decline in like-for-like sales. The company said in a statement that sales growth in the fourth quarter increased, driven by an improvement in like-for-like performance and early trading of the new autumn/winter range has been encouraging.

The company added that Primark has performed well in the UK where sales in the total clothing, footwear and accessories market have been weak, with sales growth of 3 percent and a like-for-like sales decline of 1 percent. Sales growth was driven by a strong contribution from new selling space.

Primark expects annual sales to rise across markets

Primark said, sales in the Eurozone are expected to be 5 percent ahead of last year at constant currency, with particularly strong sales growth in Spain, France, Italy and Belgium. The company’s new stores in Bordeaux, Seville Torre and Ljubljana contributed to the sales growth. However, like-for-like sales fell by 3 percent, driven by a weak performance in Germany.

The company’s US business continued to deliver sales growth, driven by strong trading at the Brooklyn store, which opened last summer, and like-for-like growth. The company added that this, coupled with the lower operating costs arising from the selling space reduction in three stores, will result in a significantly reduced US operating loss. Its tenth US store at American Dream, New Jersey will open this autumn to be followed by Sawgrass Mills, Florida later in 2020 and the company exchanged contracts on a store in State Street, Chicago.

The first half operating margin of 11.7 percent was well ahead of the same period last year of 9.8 percent driven by a weaker US dollar on contracted purchases, better buying and tight stock management. The company expects margin in the second half will be lower reflecting the effect of a stronger US dollar on purchases. Primark’s full year outlook for operating profit is unchanged, with margin ahead year-on-year.

Primark expands retail footprint

Retail selling space increased by a gross 0.95 million sq. ft. this year, with 14 new store openings. Four stores were added in the UK; three in Germany; two in Spain; two in France and one each in Belgium, the Netherlands and its first store in Slovenia. The company relocated to new premises in Birmingham High Street which, at 160,000 sq. ft., is the largest store. The smaller of its two stores in Oviedo, Spain, was closed and the size of the store in the King of Prussia mall in Pennsylvania was reduced. This brings the total estate to 373 stores.

In the next financial year, the company is planning to add a net 1 million sq. ft. of additional selling space, weighted to the second half. France and Spain will see the most space added and it expects to open 19 new stores together with a number of relocations and extensions. The major new stores will include Paris Plaisir, Lens and Calais Cité Europe in France, Milan Fiordaliso in Italy, Bilbao Gran Via, Barcelona Plaza de Cataluña and Seville Lagoh in Spain, Rotterdam Forum in the Netherlands and Trafford Centre in the UK. Primark’s first store in Poland will open in 2020 in Warsaw, taking Primark to its thirteenth country.

Picture credit:FashionUnited