Sales at Primark have risen 4% year on year for the 52 weeks to 14 September, as the retailer’s expansion continues apace. However, like-for-like sales dropped by 2% for the period, and it warned that future margins are set to take a hit.
In a pre-close update, Primark owner Associated British Foods, reported a 3% rise in UK sales despite an overall drop in clothing sales across the market. Eurozone sales were up 5%, driven by Spain, France Italy and Belgium.
However, the retailer noted that sales growth was attributed to rapid expansion, which included the opening of Primark’s largest-ever store in Birmingham and 14 new store openings, which added 950,000 sq ft of retail space to Primark’s portfolio. Like-for-like sales in the UK were down by 1% and Eurozone like-for-like sales down 3%.
Primark warned that the strengthening of the US dollar is set to increase the cost of goods in the next year. Although it hopes to mitigate this through “reduced materials prices, the favourable effect of exchange rates in sourcing countries and better buying”, it still expects a reduced margin next year.
Despite these challenges, the retailer is powering ahead with expansion plans, and 1m sq ft of additional selling space is set to open in its next financial year. There will be relocations and extensions as well as new stores in Paris, Calais, Milan, Barcelona and Rotterdam. A store in Warsaw will open in 2020, Primark’s first in Poland.