Primark’s first quarter sales were 12% ahead of last year despite the bad pre-Christmas weather, but the value retailer has warned that higher cotton prices are likely to impact its margins.
For the 16 weeks to January 8, sales at the value fashion retailer were up 13% at constant exchange rates. The value fashion retailer said this reflected “good” like-for-like sales and an increase in retail selling space.
The strong Christmas performance contrasts favourably with that of rival value chain New Look, where UK sales plummeted 9.1% on a like-for-like basis over the 15 weeks to January, sparking fears of a fundamental shift in consumer behaviour away from value fashion.
Primark said operating margin was higher than the same period last year, but this is expected to come under pressure primarily in the second half when the VAT increase combines with the effect of higher cotton prices. It said it remained “committed to offering the best value on the high street”.
Primark has 214 stores and 6.9 million sq ft of selling space. Ten stores opened in the period including six in the UK, five of which were former Bhs shops, two in the Canary Islands, Gelsenkirchen in Germany and Hoofddorp in the Netherlands. Capital expenditure on new stores in the full year is expected to be higher than last year.
Parent Associated British Foods reported group revenue up 10%, or 7% at constant exchange rates.
It said its results are in line with its expectations for the period.