Primark plans expansion with more stores and first move online

Fashion chain to open 11 outlets over the next year

The discount fashion retailer Primark is looking at selling clothing online as it continues an expansion drive that helped its profits and sales soar this year.

News of Primark's online ambitions came as its owner, Associated British Foods – whose other brands include Kingsmill bread and Ovaltine drinks – posted a six per cent fall in full-year, pre-tax profits to £495m.

John Bason, the finance director of ABF, said: "We would love to have lots more stores and online, but it depends on resources. The priority is more stores." His comments are likely to cause the most concern at Asos, the online fashion specialist, although many of the UK's biggest fashion retailers, including Marks & Spencer, Asda and Tesco already sell clothes online.

Primark, which has 191 stores in the UK, Ireland, the Netherlands, Germany and Portugal, delivered adjusted operating profits up by eight per cent to £252m for the year to 12 September, driven by new stores and storming underlying sales. Total sales rose by 20 per cent to £2.31bn, despite the recessionary environment.

Mr Bason described as "exceptionally good" the nine per cent uplift in Primark's like-for-likes sales in the second half. In particular, he cited strong sales of womenswear, footwear, accessories and childrenswear products, as it showed its rivals a clean pair of heels.

Marks & Spencer, which posts half-year results today, has already said its like-for-like sales of general merchandise, primarily clothing, fell 0.8 per cent for the 13 weeks to 26 September. Also today, Next will unveil its third-quarter figures and Shore Capital has raised the "possibility" of positive underlying sales.

Primark opened 12 stores over the year, including four in the UK and its first stores in the Netherlands, Germany and Portugal. This financial year, the retailer plans to open 11, including its first store in Belgium. Mr Bason said it had looked at taking a 100,000 sq ft store in Cardiff's new St David's shopping centre, but had not yet decided whether to proceed.

ABF made an adjusted profit before tax and exceptionals of £655m, up four per cent, over the year. Profits rose at ABF's sugar and agriculture, and ingredients divisions, but fell at its grocery business, after it took a hit on vegetable oil future contracts in the US in the first half. It plans to close its Twinings tea-packing factory with the loss of about 260 jobs in Newcastle, as well as cutting 130 jobs at its Andover plant in Hampshire due to investments in automated packaging equipment. ABF, which has net debt of £999m, said group revenues rose by 12 per cent to £9.3bn.

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