Primark like-for-likes hit but UK market holds up

Global like-for-likes dropped 1.5% in the 24 weeks to March 3. Overall, sales rose 7% in constant currency and 8% in actual exchange rates, driven by an increased footprint.

Primark blamed the decline in like-for-likes on unseasonably warm October weather and a cold snap at the end of the period as freezing temperatures hit Northern Europe, a vital marketplace for it.

The value retailer has previously managed to buck the tough fashion market but warned that this half would see like-for-likes fall as disadvantageous weather hit sales.

In the 15 weeks to February 24, like-for-likes rose 1%, with record sales in the week leading up to Christmas.

Regional breakdown

In the UK, like-for-likes were up 3% and total sales up 8%. Primark hailed a “strong increase” in its share of the clothing market.

In continental Europe, sales rose 6% but like-for-likes declined. Primark was tight-lipped about how much its new US stores generated over the period but said that the business had “made progress”.

It added: “We continue to refine the operating model of our stores in the Northeast. We expect to reach an agreement soon to open a store in Sawgrass Mills, Florida in late 2019 which will provide the opportunity to trade in another type of retail environment, in both mall format and geographic location, to our existing stores.”

Margins

Primark’s operating margin dipped very slightly over the half, coming in at 9.8% compared with 10% over the same period last year. The business said that, as in previous periods, better buying and stock management offset the adverse effect of buying in dollars.

Primark’s profit growth is expected to accelerate during its second half, driven by both better buying and the recent weakness in the US dollar.