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Primark reports strong Christmas trading

Primark, the value retailer has reported strong Christmas trading and double-digit growth for its first quarter.

Sales at Primark, Associated British Foods’ retail division, were up 16% for the 16 weeks to January 7 2012 on the same period last year.

Primark’s parent ABF said in a statement today that like for like sales growth was “good”, with particularly strong trading over Christmas, after a slower start to the financial year stemming from a warm autumn.

The value retailer also reported increasing its selling space by 0.5 million sq ft since the year financial end.

A total of nine new stores opened: two in Spain, three in Germany, one in Portugal, one in the Netherlands, and two in the UK including its flagship in Scotland, which opened on Princes Street in Edinburgh before Christmas.

Two concessions were opened in Selfridges stores in Birmingham and Manchester in the period.

Primark now has 232 stores, spanning 7.8 million sq ft.

Further openings are planned for the second half including three stores in Spain, in March. Capital expenditure on new stores and refits for the full year is expected to be similar to last year.

ABF’s total capital expenditure was lower than last year despite continued investment in new stores for Primark.

Operating margin was also lower than last year, as Primark had continued to absorb higher cotton prices. The benefit of the recent dip in cotton prices and lower input costs isn’t expected to be seen until the second half.

ABF’s net debt as of January 7, at £1.4bn, was “a little” higher than last year, the company said.

Overall, ABF said its group trading results were in line with expectations, but that “economic uncertainty, particularly in the eurozone, and continued pressure on consumer disposable incomes are expected to remain key features of this financial year”.

Yesterday, Primark staff in Northern Ireland were close to calling a strike following a second year of pay freezes. Usdaw members, which cover 85% of workers in Primark’s eight Northern Irish stores, are being balloted on the potential action which closes tomorrow.

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