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Higher-priced sales offset Primark’s margin decline

Sales of higher-priced product helped to offset margin declines at Primark, which notched up a 7% like-for-like sales rise in the year to September 12.

John Bason, finance director of parent company Associated British Foods, said a more profitable sales mix, combined with better buying and lower freight costs had mitigated a fall in margins from 12.1% to 10.9% over the year.

The margin drop was largely due to fixed overhead costs of about £15m to £17m at the value retailer’s Thrapston distribution centre in Northamptonshire and the weakness of sterling against the US dollar. Products such as glamour platform boots and a power-shoulder jacket, both priced at £19, from the retailer’s autumn 09 range sold well.

Bason said: “As the year has gone by, Primark has been able to sustain higher-priced items.” He added there was no strategy to increase prices.

During the year, total sales at Primark, which has 191 stores in the UK and Europe, increased 20% to £4.3bn and operating profit rose 8.2% to £252m.

Bason highlighted Primark’s “phenomenal” year and expected like-for-like sales growth to continue but would not be drawn on whether it would grow at a similar level again.

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