Primark’s parent company Associated British Foods has announced that the retailer’s sales have rallied in the first two months of the year following “weak” Christmas trading.
Sales at Primark are expected to be up 7.5% at constant currency driven by increased retail selling space. Like-for-like sales are expected to be level with 2015 following an improvement in trade since the post-Christmas trading update.
ABF said: “Following a strong performance at the start of the financial year, trading was weaker in the weeks leading up to and over Christmas as a result of unseasonably warm weather across northern Europe. Cumulative like-for-like sales have improved since the January trading update and are expected to be level with last year in the first half after better trading during the period since then.”
Internationally sales in France were “buoyant” with strong like-for-like sales and trading at the retailer’s two new stores in the US has been “encouraging” as the range and concept have been “well received.”
The firm said operating profit margin in the period has been “better than expected”, with much of the impact of the stronger dollar being mitigated by a “good buying performance” and a “lower level of markdowns fuelled by a well-managed stock position”.
ABF, which will announce its results for the six months to February 27 on April 19, said the underlying trading outlook for the full year is unchanged, as the weakening of the pound will ease the effect of currency translation from £25m to £10m.
“For the half year we expect some progress in adjusted operating profit for the group although adjusted earnings per share are expected to be slightly lower. The weakening of sterling in recent weeks, particularly against the euro, will ease the effect of currency translation on this year’s results assuming current rates prevail, reducing our previous estimate of £25m to £10m.”
It added: “We now expect only a marginal decline in adjusted earnings per share for the group for the full year.”
At Primark retail selling space increased by 300,000 sq ft in the last six months and Primark’s 299 stores are trading from 11.5 million sq ft of retail selling space.
Over the last six months Primark opened six new stores including 133,000 sq ft store on Gran Via in central Madrid in October and its second store in the US at the King of Prussia mall in Pennsylvania at the end of November.
Primark will open a further six stores in the US later this year and a 70,000 sq ft store in the American Dream shopping mall in New Jersey in 2017.
The retailer will also open its first Italian store in April in Arese, north-west of Milan, and it is also planning to add a store in a mall north of Florence by the summer of 2017.
ABF added it was making a “significant investment” in its warehouse infrastructure. Last year, capacity was added in Spain and Germany and a new warehouse in Bor, on the western border of the Czech Republic was opened. This summer Primark will move its Magna Park distribution centre in the UK to a larger, purpose built warehouse at Islip, Northamptonshire, and a new facility in Roosendaal in the Netherlands will open later in the year.