Primark expects UK sales for the 24 weeks to 3 March to be 8% ahead of 2017, showing a “strong increase” in its share of the clothing market.
John Bason, finance chief at Primark parent Associated British Foods (ABF), told Drapers that the figures showed Primark had “the largest increase in market share in the UK of any player, online or bricks and mortar”.
UK like-for-like sales are expected to be up 4% year on year, while total sales at the company are predicted to be up 7% on last year.
Bason said: “A lot of retailers are finding it hard to grow their top lines. But Primark is a growth vehicle. We have lots of space to add, particularly across [mainland] Europe. We have chunky stores going into new, big locations in a confident store opening programme.”
On the other hand, total like-for-like sales are expected to be down 1% for the period as a result of an “unseasonably warm” October, which caused a “significant decline”.
Like-for-like sales for the 16 weeks to 2 March will be up 1%, as the retailer achieved “record sales” in the week running up to Christmas. Bason said early trading of spring stock was “going well”.
Operating margins in the first half are expected to be close to those in the same period last year, as better buying offset the adverse effect of the US dollar exchange rate on purchases.
Stock was tightly managed during this period and markdowns will be in line with those of the first half last year.
Bason said: “Primark is standing very particularly well at this point in terms of operating margin. It will be down a little bit half-year on half-year, but I think [we are reaching] a turning point.
“Our margin previously declined because we didn’t put prices up in the UK after sterling devalued, but I think the second half will see an improvement, and if exchange rates stay where they are, we will see very good improvements in 2019.”
Primark said it expects an acceleration of profit growth in the second half as a result of an improvement in margin over the same period last year. This will be driven by better buying and some benefit of the recent weakness of the US dollar.
Retail selling space increased by 400,000 sq ft since the financial year end last year and, as at 3 March 2018, 352 stores will be trading from 14.3 million sq ft. Seven new stores were opened in the period: in Germany in Bielefeld and Münster, and a second store in Stuttgart; Charlton and Staines in the UK; Loulé in the Algarve, Portugal; and Le Havre in France. In addition, there were two relocations in the UK: a return to the redeveloped Westgate shopping centre in Oxford and a move to a larger store in Rotherham.
Primark expects a total of 1.2 million sq ft of new selling space to be added in this financial year. New stores are planned for Toulouse and Metz in France, Munich in Germany, Antwerp in Belgium, Valencia in Spain, Brooklyn – its ninth store in the US, and in the Westfield London shopping centre at White City. Primark will also move to much larger premises in Kingston.