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Primark ‘still sees good growth potential in UK’, says finance boss

The UK continues to offer Primark opportunity for growth alongside its ambitious overseas expansion strategy, John Bason, the finance director of the value retailer’s parent company Associated British Foods, said today.

It comes as the retailer announced sales grew 9% at constant currency to £5.9bn for the year to 17 September, while adjusted operating profit increased 1% to £689m.

Primark is set to open 400,000 sq ft of its 1.3m sq ft scheduled for this financial year in the UK, with new stores in Truro, Colchester and Llandudno due to open before next summer.

Since the year end it has opened in Carlisle, relocated in Reading and Sheffield and is set to open in Truro and Basildon before the end of the year. It will open in York city centre in December and in Colchester and Llandudno early next year.

“Our story of growth in sales, up in constant currency by 9%, is all about expansion in a number of overseas markets,” said Bason. “Some have been better than others – our first store in Italy and new stores in France have been runaway successes – but all markets are making the progress we want.”

Primark is planning further expansion in Germany and France, in Brescia and Florence in Italy and a new 89,000 sq ft flagship in Amsterdam. In the US, where Primark now has five stores, it will expand to 10 by the next financial year with new stores in Burlington, South Shore and Staten Island.

Bason said: “Current trading is up against strong like-for-likes but we have made a solid start to the season. Last week was very good.

“If the weather remains appropriate, I have every confidence for a good Christmas,” he said.

Bason was keen to view the company’s sales, which fell by 2% on a like-for-like basis, in the context of declines in the clothing market as a whole.

“We have grown market share in nine out of ten of our markets,” he said. “The only one we haven’t is Belgium, where we have a well performing store on Rue Neuve, which was close to last year’s terrorism attacks.

“We are holding or increasing our market share against a backdrop where for example like the UK had a decline in sales by value for the first time in many years, so although I don’t like the decline in like-for-like sales, it means we are outperforming the market.”

Critics have often commented on Primark’s lack of ecommerce but Bason said the fact its market share is increasing despite competition from multichannel or pureplay retailers means the company is in “good shape”.

“Our digital and social media strategy is working really well and the numbers are huge – we have more than 8 million followers across the four major social channels and 8 million people visited the Primark website in September,” he said.

“These people are involved and interested knowing that we have no ecommerce and want to come into stores to buy.”

He reinforced there was no change for its pricing strategy and that the firm would absorb higher import costs from its margin.

“The plans are that there will be no price increases,” he said. “That may change again but we’re not in a different place than our last trading update when we said the same thing.”

 

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