Primark will ramp up its retail expansion plans this year, as it reports sales for the year ending September 12 were 13% ahead of last year at constant currency.
Sales increased to £5.3bn for the 12-month period, driven mainly by an increase in retail selling space of 9% in Germany, Belgium and the Netherlands. At the end of the financial year, Primark opened its first store in the US, in Boston on September 10.
The company added 20 new stores and almost 1m sq ft to its retail portfolio, ending the year with 293 stores. It expects next year’s increase to be even greater at 1.5m sq ft, most of which will be in northeast US, the UK, Spain and France. Primark opened a 133,000 sq ft store on Gran Via in central Madrid last month and will open its first Italian store at a new shopping centre in Arese, northwest Milan, early next summer.
Like-for-like sales were up by 1% on the previous year and high sales densities were achieved by stores opened in the last 18 months, particularly in France, the retailer said.
Operating profit was up by 5% at constant currency to £673m but adjusted operating profit margin fell 0.8% to 12.6% during the period.
Sales were hit by the unseasonably warm autumn last year, but this was followed by strong trading across the Christmas period. Spring trading was held back by cool weather, although this picked up in the fourth quarter of the financial year.
The value retailer said Spain, Portugal and Ireland all performed well throughout the year and the UK delivered a positive like-for-like performance, however this was partly offset by the impact new stores in the Netherlands and Germany had on existing stores in that region.
“We also increased the scale of Primark’s distribution infrastructure to support this growth by extending existing warehouse capacity and opening new facilities in the Czech Republic and the US,” said Charles Sinclair, chairman of Primark parent company Associated British Foods (ABF).
Revenue at ABF fell by 1% to £12.8bn in real terms, which registered as a 2% increase at constant currency, while operating profit was down 6% to £1.1bn at actual rates and a decline of 4% at constant currency. Net debt for the group was reduced to £194m during the period.
“We delivered a strong operational performance despite the challenges of food commodity deflation and big movements in exchange rates,” said George Weston, chief executive of ABF. “The group continues to generate strong cash flows and to reduce net debt. While marginally down, our earnings per share result underlines the group’s strength.”