Associated British Foods, the owner of discount fashion chain Primark, has said that the group’s adjusted operating profit for the second half will be substantially ahead of last year and in line with expectations.
The group, which also owns Silver Spoon, said its performance was helped by strong trade at Primark where sales for the full year are expected to be 17% ahead of last year. ABF said Primark had benefited from an increase in retail selling space and like-for-like sales growth which it expects to be 3% for the full year.
Primark’s summer trading in the UK was particularly strong while sales in continental Europe were “buoyant”. ABF said trading in newly opened stores had exceeded expectations and the opening of the new store in Berlin in July was the most successful first day’s sales ever. Early sales of the autumn/winter range have been encouraging.
While the retailer’s operating margins in the first half were lower than last year reflecting the absorption of high cotton costs which were not passed on to customers, they increased in the second half due to a fall in cotton prices.
ABF grew its investment in new stores for Primark in the period and will be ahead of last year for the year as a whole. Seven new stores were opened in the second half including one in Berlin and five stores in Spain bringing the total there to 28. Two more stores are planned to open before the end of the financial year with one in each in Spain and the UK. The retailer’s second store on London’s Oxford Street, which has 80,000 sq ft of selling space over four floors, is scheduled to open on 20 September, just after the year end.
By the financial year end Primark expects to have opened 19 new stores and added 0.9m sq ft of selling space bringing the total to 242 stores and 8.2 million sq ft.