Primark sees sales surge 24 percent

Value clothing retailer Primark has posted a significant surge in sales, citing a 24 percent gain in the six months to March 2nd. Owned by parent company Associated British Foods, Primark saw a strong performance in the first half,

with like-for-like sales 7 percent up from last year.

Lower

cotton prices boost trading strategy

Profit margins improved due to lower cotton prices and better trading. Primark's performance helped AB Foods to report half-year pre-tax profits of 415 million pounds, up from 329 million pounds a year earlier.

With the UK economy and economies across Europe seeing weak or negative economic growth, Primark's focus on cheap clothing has proved to be popular among cash-strapped consumers.

"The Primark success story continues. The performance from Primark in the first half was exceptionally strong," said AB chairman Charles Sinclair. "Trading in the period was very strong, the profit margin was much improved, customers in continental Europe have taken enthusiastically to the Primark brand and there is very real momentum in the addition of selling space."

Fast track European expansion

The chain has been expanding rapidly. AB said that it had opened 15 new stores in the past six months, taking the total to 257. Its expansion into Europe includes six new stores in Spain, two in Germany, two in Austria and one in the Netherlands. It plans to open stores in France in the next financial year.

It is faring much better than rival UK clothing retailers. In the first three months of the year, Marks and Spencer reported a 3.8 percent fall in general merchandise sales, which includes clothing.

However, the 7 percent rise in like-for-like sales at Primark over the half-year implies a slowdown in recent sales, as the chain had recorded a 9 percent increase in underlying sales during the first 16 weeks of the period.

As a result, while AB Foods expects strong profit growth from Primark in the full financial year, it would not be at the "same level" seen in the first half, said Mr Sinclair.

Image: Primark SS13