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Primark sales up 15% but like for likes flat

Primark has reported that like-for-like sales were level with last year for the 24 weeks ending February 28, after being hit by the unseasonably warm weather in Europe during the autumn and the impact of opening new stores in the Netherlands and Germany on existing stores in the region.

Sales in the first half were 15% ahead of the same period last year at constant currency, driven by an 11% increase in retail selling space and high sales densities in stores opened during the last year.

At actual exchange rates, sales were £2.5bn up 12%, while profit was up 8% to £322m during the period, due to the weakening of the euro against sterling.

Stores which opened in the half-year period including Berlin’s Alexanderpatz, Cardiff, Stuttgart, Cologne, Marseille and all three stores in Paris are now regularly featured in Primark’s top 20 stores by annualised sales.

The value retailer said like-for-like sales over Christmas were strong. The UK was said to deliver a positive like-for-like performance, while Spain, Portugal and Ireland all performed strongly.

Operating profit margin was 12.6%, which is 0.5% lower than last year due to a higher level of mark-down.

The retailer was also hit by sourcing a proportion of its product in US dollars, which strengthened particularly against the euro and had an impact on sourcing costs.

The impact of the sustained US dollar strength will increase costs for autumn 15 and will be seen in the fourth quarter of this financial year and into the following financial year, Primark warned.

The company was trading from 287 stores and 10.7m sq ft of space by February 28, which was an increase of 0.5m sq ft since the last financial year end and by 1.1m sq ft since the 2014 half year.

Ten new stores were opened during the period, including the relocation of the Northampton store to larger premises, four stores in the Netherlands and three in Germany.

Further store openings or extensions to stores will take place in Germany, Belgium and the UK in the second half of this year.

The company has extended its warehouse capacity in Europe during the first half and plans further expenditure later in the year. At the beginning of this year the capacity at Torija in northern Spain was doubled and the extension of its Mönchengladbach warehouse in Germany, which increased capacity by 60%, is now fully operational. Primark plans to open a new warehouse in the autumn, located in Bor on the western border of the Czech Republic, which will service stores in Austria and Germany.  

Primark will make its entry into the US market later this year, having signed eight store leases in the north-east of the country, including seven from US department store retailer Sears.

Six store locations have been announced including Downtown Crossing in Boston, and five in shopping malls including King of Prussia and Willow Grove Park, Pennsylvania; Staten Island, New York; Danbury Fair, Connecticut; and Freehold Raceway, New Jersey.  A lease has also been signed for warehouse space located in the Lehigh Valley area of Pennsylvania.


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