Primark’s adjusted operating profit grew by 25% year on year to £426m for the 24 weeks to 2 March, driven by a weaker US dollar, better buying, tight stock management and reduced markdowns.
Sales were up 4% to £3.6bn during the half, fuelled by increased retail selling space. Like-for-like sales dipped 1.5% on the same period in 2018.
The retailer said early customer reaction to the new spring range had been encouraging.
In the UK, sales were 2.3% ahead of last year and like-for-like sales grew by 0.6%. Primark said its share of the total clothing, footwear and accessories market increased substantially during the half.
The effect of low footfall in November was offset by good trading in all other months of the first half, and strong growth in the last two weeks of the period was compared with a spell of very cold weather last year.
Sales in Europe were 5.3% ahead of last year at constant currency, while like-for-like sales fell by 3.2%, driven by a decline in the German market and a drop in footfall in November across all markets.
The retailer said it had particularly strong sales growth in Spain, France, Italy and Belgium.
In Germany, Primark has strengthened its management team to address ongoing tough trading. The business plans to reduce selling space at a small number of German stores in order to optimise their cost base.
The US continued to perform strongly with like-for-like sales growth. This, coupled with the benefit to store profitability arising from the reduction in selling space at Freehold and Danbury last year, resulted in a much-reduced US operating loss.
Primark’s operating margin in the first half was 11.7%, up from 9.8% in the same period last year. It said foreign exchange contracts are in place for all of the remaining purchases for the year and the strengthening of the US dollar reflected in those contracts will result in a lower operating margin in the second half.
However, expectations for operating profit for the full year is unchanged, with margin a little ahead of last year.
Four new stores were opened in the first half: Seville and Almeria in Spain, Toulouse in France and a city centre store in Berlin, Germany. In the UK, Primark relocated to larger premises in Harrow and the Merry Hill and Peckham stores were extended.
Primark expects to add 950,000 sq ft of new selling space in this financial year, including new stores in Utrecht in the Netherlands, Bonn in Germany and its first store in Slovenia, in Ljubljana. Primark has also signed leases for its first stores in Poland and the Czech Republic.
Earlier this month, the retailer opened its largest store to date in Birmingham.
As exclusively revealed by Drapers, during the second half of the year Primark’s buying, merchandising, design, sourcing and quality functions, currently located in Reading and Dublin, will be consolidated in Dublin.