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Primark profit margin falls on strong dollar

Primark sales rose by 7% at constant currency for the 16 weeks to January 2 as it opened more stores but operating profit margin fell on last year on the back of the stronger US dollar.

Primark autumn 15

Primark autumn 15

However, Primark said the impact of the strong dollar on margins was lower than it previously expected thanks to performance from its buying teams and less discounting due to tight stock control.

The value retailer said sales were 3% ahead of last year at actual exchange rates as the euro weakened against sterling.

Primark reported a tale of two halves in the period, with like-for-like sales increasing in the first seven weeks against weaker comparatives during the mild autumn in 2014, but performance in the following nine weeks was weaker when the weather was warmer and wetter.

As a result, it said the impact on like-for-like sales of new store openings in northern Europe was much reduced and total sales were ahead of last year.

Primark opened six new stores in the period including a Madrid flagship and a second US store at the King of Pennsylvania mall. It had 299 stores by the January 2 and will open a further six stores in the US during this calendar year.

It will open a new 1.1m sq ft UK warehouse in Islip in Northamptonshire by the summer and will move operations from its Magna Park facility over the following months. A warehouse in Roosendaal in the Netherlands is also under construction and is set to open later this year.

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