In constant currency, sales at UK fashion retailer Primark were 15 per cent ahead from the first half of fiscal 2014, for the 24 weeks period ended February 28, 2015,.
At actual exchange rates and as a result of the weakening of the euro against the sterling, total sales were 12 per cent higher over the same period of previous fiscal.
“The first half of fiscal 2015 sales was driven by an 11 per cent year over year increase in retail selling space and very high sales densities in stores opened during the last 12 months,” Primark said in a press release.
Like-for-like sales were level with last fiscal’s first half and were held back by unseasonably warm weather across northern Europe. However, like-for-like sales over the Christmas trading period were strong.
UK delivered a positive like-for-like performance and Spain, Portugal and Ireland all performed very strongly.
As new stores opened in the Netherlands and Germany, sales in existing stores declined as customers chose to shop more locally rather than travelling the long distances as was done in the past.
According to Primark, this is consistent with the normal trading pattern, it has seen in the early days of Primark’s expansion in new countries.
If the Netherlands and Germany are excluded from the comparison, like-for-like growth for Primark would have been 3 per cent year on year in the first half of fiscal 2014.
Adjusted operating profit for the period under review was 11 per cent higher at constant currency and 8 per cent ahead at actual exchange rates.
Operating profit margin of 12.6 per cent was 50 basis points lower than last year driven by higher levels of mark-down.
“A proportion of our product is sourced in US dollars and it’s strengthening, particularly against the euro, has an impact on our sourcing costs which our buying teams are working to mitigate,” the retailer informed.
The impact of sustained US dollar strength is expected to increase its costs for the autumn/winter season and will be seen in the fourth quarter of the current fiscal.
Retail selling space increased by 0.5 million sq feet since the last fiscal end and as on February 28, 2015, Primark was trading from 287 stores and 10.7 million sq feet of retail selling space.
The fashion retailer opened ten new stores in the reporting period including the relocation of the Northampton store to much larger premises.
It opened four stores in the Netherlands, increasing space by some 60 per cent and bringing its total to 12 stores and three stores in Germany including the 80,000 sq feet outlet in Dresden.
Significant investment was made in the first half of fiscal 2015 to expand warehouse capacity in Europe and further expenditure is planned for later in the year.
At the beginning of this year, the capacity at Torija in northern Spain was doubled and the extension of its Mönchengladbach warehouse in Germany, which increased capacity by 60 per cent, is now fully operational.
