Primark’s value positioning and strong summer ranges have put it firmly on track to outperform in the second half of the year.
The retailer this week reported a sector-busting like-for-like sales uplift of 4% for the six months to March 1. It said it expected margins to strengthen in the second half of the year and that it would also benefit from soft comparatives against last year’s washout summer.
Margins were 12.3% for the first half, against 12.6% for the first half of 2007.
John Bason, finance director at Primark’s parent company Associated British Foods, said: “Margins at Primark were broadly unchanged in the first half. I expect margins to go up as we see the effect of the second half, especially if this summer is normal against the difficult summer last year.”
Sales rose 25% to £899 million for the year and operating profit was up 22% to £111m.
ABF chief executive George Weston said: “Primark saw the benefits of last year’s space growth, but also had a really good like-for-like performance. Our stores in Spain are trading very strongly and the two that have been open for more than a year have extremely strong like-for-likes.
“Primark is well positioned in the [Spanish] market and we are very encouraged by the performance.”
Weston stressed there was still a good pipeline for new UK openings. “There are plenty of places in the UK without a Primark. Liverpool used to be our greatest example, but now it’s Edinburgh. The UK growth story is not over,” he said.
Primark has already upped its opening ambitions for this year. On top of plans for eight stores, it will add two more in the UK and two in Spain, plus one in the Republic of Ireland. It opened its fifth, sixth and seventh Spanish stores this week.
Separately, analyst Kaupthing said the opening of an extra floor at Primark’s Manchester city centre store meant it was likely to nudge sales of £100m for the year.