Primark sales expected to be 12 percent ahead of last year

Primark, part of the Associated British Foods in its update prior to entering the close period for its interim results to February 28, 2015, to be announced on April 21, 2015 said that its sales are expected to be 16 percent ahead of last year at constant currency driven by an 11 percent increase in retail selling space and very high sales densities in stores opened during the last year. As a result of the weakening of the euro against sterling, total Primark sales are expected to be 12 percent higher over the same period last year at actual exchange rates.

All five of its French stores opened over the last year have performed well. Sales for the group in the last three months, including the important Christmas period, were strong and cumulative like-for-like sales have improved since the January trading update and are now level with last year. Total first half like-for-like sales growth for the group was held back by the unseasonably warm weather in the autumn across northern Europe and the impact, on existing stores, of new store openings in the Netherlands and Germany. However, total sales in northern continental Europe were well ahead of last year. Operating profit margin in the period has been in line with expectations, although lower than last year.

The company opened ten new stores in the period including the relocation of the Northampton store to much larger premises. Four stores were opened in the Netherlands, bringing the total there to 12 and increasing space by some 60 percent, and 3 stores in Germany including 80,000 square foot in Dresden. It has planned a very strong pipeline of new stores in Europe extending over a number of years including further stores or extensions in Germany, Belgium and the UK.

While significant investment has been made, and is planned, to expand warehouse capacity in Europe, at the beginning of this year the capacity at Torija in northern Spain was doubled and the extension of its Mönchengladbach warehouse in Germany, which increased capacity by 60 percent, is now fully operational. A new warehouse is being planned in Bor, on the western border of the Czech Republic, to service stores in Austria and Germany. Good progress has also been made in building the management team in the US as it aims to launch in late 2015. The company has signed eight leases for stores in the north east of the country, including seven from Sears.