Primark profits soar in “magnificent” year’s trading

Primark spoke Tuesday of a “magnificent” year’s trading as the Europe-based value fashion retailer’s profits leapt 30% and sales almost broke through the £5bn barrier. Primark’s annual profits to September 13 hit £662m with parent Associated British Foods (ABF) saying the retailer’s sales rose 16% (up 19% currency neutral) to £4.95bn after it opened new stores across Europe. Same store sales were also up 4%. The group described Primark’s trading as “excellent”, with strong demand for its autumn/winter and spring/summer collections adding to a successful launch in France last December.

Adjusted operating profit margin rose to 13.4% from 12% a year ago. It said adjusted operating profit margin in H1 was higher than last year, reflecting the benefit of warehouse and distribution efficiencies and lower freight rates. Those benefits continued in H2 with strong trading over the summer resulting in a lower level of markdowns, it added.

ABF chief executive George Weston said: “Primark’s trading success and significant expansion delivered another magnificent year… substantially outperforming last year.

“Our highly successful entry into France this year brings the number of countries in which Primark operates to nine.

“We were delighted by the success of these French stores, both for the size of the crowds on opening days, which were overwhelming, but more importantly for the tremendous customer enthusiasm for Primark, in very different cities, which was sustained throughout the rest of the year,” noted Weston.

He also said eight years on from the brand’s initial entry into Iberia, this year’s like-for-like growth achieved its Spanish stores was “particularly strong”.

“Primark has now developed experience in establishing the brand in new markets and has achieved considerable trading success in each of them,” Weston added.

Now with 278 stores measuring 10m sq ft of space, up 1.2m sq ft year-on-year, in locations across Europe, the chain is to continue its expansion, announcing last month it will open stores in the north-east US in a deal with Sears Holdings.

“The first [US] stores [are] expected to open late in 2015 and with up to 10 stores by the end of 2016,” confirmed Weston.

Overall, adjusted pre-tax profits at ABF lifted 2% to £1.1bn. Revenue fell slightly to £12.9bn, from £13.3bn. At constant currency rates, revenue would have been up 1%.

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