Primark expects 13 percent rise in FY15 sales

Primark, a part of the Associated British Foods announced an update prior to entering the close period for its full year results to September 12, 2015. Sales at Primark for the full year are expected to be 13 percent ahead of last year at constant currency mainly driven by an increase in selling space of 9 percent. Sales on a like-for-like basis are expected to be 1 percent ahead of last year reflecting a strong performance across a number of countries.

Very high sales densities were achieved by stores opened in the last 18 months and especially by its stores in France. As a result of the weakening of the euro against sterling, sales are expected to be 8 percent ahead at actual exchange rates. The company said that like-for-like sales in the early part of the financial year were impacted by the unseasonably warm autumn followed by strong trading across the important Christmas period and spring trading was held back by cool weather followed by strong trading in the fourth quarter.

Positive performance across countries

Spain, Portugal and Ireland all performed very well throughout the year and the UK delivered a positive like-for-like performance. The success in these markets was partly offset by the impact that the opening of new stores in the Netherlands and Germany had on existing stores in that region, which reduced in the fourth quarter.

The company expects operating profit margin to be close to that achieved in the first half. As anticipated, this will be lower than last year as a result of the higher level of markdown and the effect of the stronger US dollar, at the end of the financial year, on purchases for the new autumn/winter range. Since Primark sources much of its merchandise in dollars and the US dollar’s strength, particularly against the euro is expected to make an adverse effect on margins in the new financial year, especially in the first half.

Retail expansion to support sales growth

During this financial year, the company would have opened almost one million square feet of selling space bringing the total estate to 293 stores and 11.2 million square feet at the financial year end. 20 new stores will have opened including relocations to larger premises in Northampton and Murcia, Spain. The company closed a store on The Headrow in Leeds, following the success of the much bigger store opened in the nearby Trinity shopping center in December 2013, and also closed two small stores, bringing the net additions in the year to 15. These new stores include 77,000 square feet one at Downtown Crossing in Boston, the company’s first store in the US, which will open on September 10.

New space was added in the Netherlands, Belgium and Germany with an additional six stores in Germany. The company aims to open stores over the next few years with some 1.5 million square feet scheduled for the new financial year, the major ones of which will be in the northeast US, the UK and Spain. The US will comprise seven stores, totaling 0.4 million sq. ft., most of which will open later next year; Spain will include a flagship, 132,000 square feet, store on Gran Via in central Madrid; followed by openings at Lyon, Nice and Toulon. Its first Italian store at a new shopping center in Arese, northwest of Milan will also be launched in early summer.

The company’s existing warehouse in Torija in northern Spain was doubled in size at the beginning of this year and increased the size of the facility at Mönchengladbach in Germany by 60 percent and its new warehouse in Bethlehem, Pennsylvania is now fully operational. Primark also recently opened a new warehouse in Bor, on the western border of the Czech Republic. Next year will see the relocation of Magna Park, UK warehouse to a larger site at Islip in Northamptonshire.