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‘Unseasonable’ weather hits Primark’s sales

Like-for-like sales at Primark for the year to 17 September are expected to drop 2% as a result of last year’s warm winter and cold spring.

Primark

Primark

Total sales at the retailer are expected to rise 9% year on year following an average increase in selling space of 9% during the year.

Ireland showed a “strong” performance during the year, while Spain, France and Austria traded well and sales in the Netherlands and Germany improved. The retailer said the UK’s performance was “in line with the group with good trading in periods of more typically seasonal weather.”

Primark said it expects operating profit for the second half of the financial year to be in line with the first half, however the business warned the weakened pound caused by the Brexit vote in June will hit margins next year.

In a statement Primark owner Associated British Foods said: “The transactional impact on Primark’s margins from the weakening of sterling against the US dollar, particularly since the European Union referendum, will have no effect in this financial year as a result of our practice of taking out forward-currency contracts when garment purchase orders are placed. However, at current exchange rates, margin will be adversely affected in the new financial year.”

During the year Primark opened a net 1.2m sq ft of selling space, bringing the total estate to 315 stores and 12.3m sq ft. A net 22 new stores have been opened and there have been two temporary relocations in Oxford and Grimsby pending redevelopment.

New stores this year include its first store in Italy, at Arese, north-west of Milan, a 135,000 sq ft Spanish flagship on Gran Via in Madrid, three stores in each of France and the Netherlands, seven in the UK, four stores in the north-east of the US and a store in each of Germany, Portugal and Austria.

Just 12 months after launching in the US Primark said awareness of the brand “started at a low level and has continued to grow.”

The retailer said it has been well received with “very positive” customer feedback and is encouraged by the most recent openings in the regional malls at Danbury, New England, Willow Grove Park, Philadelphia, and Freehold Raceway, New Jersey.

Globally 1.3m sq ft of new space is planned to be opened next year. Five stores are planned for Germany, two more Italian stores in Florence and Brescia, and a 89,000 sq ft store in the centre of Amsterdam. Three more stores will be opened in the north-east of the US, bringing the total to eight, and an extension to the Downtown Crossing store in Boston is planned that will increase selling space by 20%.

In London a 32,000 sq ft extension to the Oxford Street East store will be opened ahead of the important Christmas trading period.

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