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Still lots of opportunity in the UK, says Primark finance boss

Primark does not consider itself to be at or near saturation point in the UK and Ireland and will continue to open new stores and bigger units, the firm’s finance boss John Bason has told Drapers.

Bason was speaking after the retailer announced total UK sales were up 7% year on year for the 24 weeks to 4 March, while like-for-like sales in the UK were up 2%.

“We’re still able to open stores in the UK as there is still some white space. We opened a store in Truro, Cornwall, for example, as the nearest shop was 50 miles away in Plymouth. We can add stores without cannibalising the rest of our store estate. We still have some way to go in the UK.

“We are moving from smaller secondary locations to big primary sites, like we did with our Reading store. We will open a further three UK stores this year. There is still a lot of opportunity in the UK. We are not mature [here], we are still developing.”

During the period Primark opened 16 new stores worldwide including five in the UK; its second store in Italy in Brescia; an 89,000 sq ft store in the centre of Amsterdam; and a sixth store in the US in Burlington, Massachusetts.

Bason said the business will open another US store later this year, adding: “We’re looking closely at consumer trends, seeing what people want and what the best locations are. We have confidence in our business. When we expand we have a proven formula that works.”

More seasonal weather and backing the right trends, including gingham, boosted like-for-like sales in the UK.

“The numbers speak for themselves given the tough clothing market in the UK. Last year like-for-likes were down as the weather had affected trade. The weather was more normal this year so we’ve seen a resumption of usual service. Our buying team has done a great job, they got the trends right,” said Bason.

The operating profit margin in the first half declined 2% in constant currency, as forecast, reflecting the strength of the US dollar on input costs at the business.

In order to mitigate the cost, Bason said the retailer is reining in costs and working closely with suppliers: “They want to work with us as we are growing and we’re a success story. Our buyers have been very disciplined with their volumes and when the retail environment is difficult that shows through. Our stock has been tightly managed and we have low markdowns.”

Bason added that the retailer may continue to add products at the top end of its pricing architecture to further boost sales.

“I wouldn’t be surprised if stretching [our price architecture] at the top end is a contributor to sales moving forward. It’s not something we’re driving but we’ve seen a higher average price in our sales mix over the last few years because we have the authority to do that [in terms of fashionability].”

The retailer has yet to see an effect from Brexit, according to Bason and he added he was not worried about the announcement of a snap general election in the UK on 8 June.

“To date I don’t think we’ve seen any negative effect from Brexit. There was a lot of concern over a drop in consumer spend on clothing but we haven’t seen that. The snap election in the short term doesn’t add further uncertainty for us. No one knows what way it will go but I’ve seen us trade through a number of elections so I’d be surprised if it has a negative effect.”

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