Dominant Primark to blaze a trail into Europe
Fashion chain reveals plans to open stores in France on back of soaring first-half sales
The discount fashion chain Primark has shrugged off the gloom enveloping fashion retailers by delivering scorching profits and sales in its first half.
Primark also revealed it plans to launch its first stores in France this year, with the first likely to open in Paris, in the latest leg of plans to dominate Europe. The chain's strong performance helped its owner Associated British Foods, which also produces sugar and owns the Twinings tea and Kingsmill bread brands, raise profits by a quarter over the six months to 2 March.
Operating profit at Primark rose 55 per cent to £238m over the period, driven by strong revenue growth and fewer price mark-downs. Boosted by 15 new stores across Europe, sales grew by 24 per cent to just under £2bn.
George Weston, the ABF chief executive, said: "The autumn and winter ranges were excellent and well received by customers."
Primark, which also has stores in Spain, Germany, Belgium, Austria and the Netherlands, grew like-for-like sales by 7 per cent over the half-year.
While Mr Weston said the wintry weather had led to "weaker" trading in the UK since early March, underlying sales had remained in positive territory. This compares to a 3.8 per cent fall in fashion and homewares sales at Marks & Spencer in its fourth quarter, while Debenhams blamed two weeks of snow in January for a first-half profit warning.
Mr Weston said that, while it will initially eschew "high-profile" locations in Paris, it plans to open its first shop in France in a shopping centre on the outskirts of the capital towards the end of this year. He said Primark was also examining opening in Marseille and Lille. "We will open a few stores and see how it goes," he said.
In London, Mr Weston admitted that Primark's huge store opposite Tottenham Court Road station had had "some impact" on its flagship at the other end of Oxford Street but "less than anticipated". This was partly because its refurbishment of the shop by Marble Arch station last summer around the Olympics had given it a "second wind".
Dan Coen, a director at advisory firm Zolfo Cooper, said: "Primark has become far more fashion-orientated with fast-turning stock to reflect the latest fashion trends. The retailer has therefore been able to provide low-cost fast fashion at a time when most consumers are keeping a watchful eye on their spending."
Conglomerate ABF grew its pre-tax profit by 25 per cent to £452m over the half, on group revenues higher by 10 per cent to £6.33bn.
Citing strong performances in the UK and US, Twinings tea was the star performer for its grocery business, which grew profit by 29 per cent to £97m. Mr Weston said: "Twinings sales in the UK were well ahead of last year with continued success for the 'gets you back to you' television advertising campaign and the launch of new tea infusions."
Revenues jumped by 10 per cent to £1.32bn at its sugar production operation, but its bottom line shrank by 5 per cent to £163m, following a "deterioration" in trading in China.
Shares in ABF rose 8 per cent, or 149p, to 1,999p.
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