Value fashion retailer Primark has today reported an impressive 15 per cent jump in revenues for the first half of its financial year, thanks to underlying sales growth and numerous new stores.
Like-for-like sales rose two per cent year-on-year in the 24 weeks ending March 3rd 2012, as trading picked up over Christmas after a slow start to the period thanks to unusually warm weather during the autumn.
The retailer’s margins have been hit by high cotton prices over the period meaning its first half operating profit margin is down on last year, however the strong sales trend has helped operating profit grow from £151 million in 2011 to £154 million this year.
Associated British Food (ABF), which along with owning Primark runs commodity and agriculture operations, achieved an adjusted profit before tax for the half of £363 million - an increase of three per cent year-on-year - and a revenue spike of 11 per cent.
George Weston, CEO of ABF, said: “The group delivered good growth in revenue and profit. AB Sugar and Primark both performed strongly, demonstrating continuing momentum.
“We expect substantial growth in both adjusted operating profit and adjusted earnings per share for the group for the full year.”
Primark continued its aggressive store expansion plans by opening ten new stores over the six months; three in Spain, three in Germany, one each in Portugal and the Netherlands and two in the UK.
The group further increased its retail floor space by opening concessions in upmarket department store Selfridges for the very first time, in its Manchester & Birmingham locations, extending its outlets in Bexleyheath & Harlow, and relocating to a much larger unit at Metrocentre, Gateshead.
The company now operates from 233 stores in the UK, Ireland & mainland Europe, and, with the addition of six further stores and more store expansions due in the second half, its overall selling space is expected to total 8.2 million sq ft by the end of the year.
Simon Chinn, Lead Consultant at retail analyst firm Conlumino, argues that the resilience of Primark is largely down to the strength of its trading at new stores, and that its bold store growth strategy implement despite dampened consumer spending has proved successful.
“The real boost to Primark’s performance has come from strong trading at its new stores. Despite challenging economic conditions on the Continent, Primark has pushed ahead with its European expansion plans,” Chinn said.
“Even though there are clear signs that Eurozone consumers are reining in their spending, Primark’s low price points and fashion forward ranges appeal to the price sensitivity of consumers amid the current austerity drive.
“Of the six stores it plans to open in the second half, four will be in Spain, which will help it further grow share in the Spanish market, even as overall clothing spend in the country continues to fall.”