Cheap petrol fuels Primark profits as shoppers splash out
Cheaper fuel has helped boost sales at fashion chain Primark as consumers are left with extra cash to splash out on shopping.
Primark's owner, Associated British Foods (ABF), said that the pace of sales picked up in the past eight weeks as people were left with more disposable cash following the oil price slump.
"Normal, ordinary families, the people who shop in Primark, suddenly every week if they fill their tank with petrol have got £20 (€27) more to spend," said Primark finance director Jason Bason.
"Whether it all comes to Primark is a moot point, but it's got to help."
But the chain, which is headquartered in Dublin and trades as Penneys here, said a weaker euro will dent reported sales in sterling during the current financial year. It said that at a constant exchange rate, sales are expected to be 16pc higher, but at actual exchange rates will be up 12pc.
Primark experienced strong Christmas trading and said like-for-like sales since its last update in January are now level with last year.
But it also said that its total like-for-like sales in the first half of its financial year were restrained by unseasonably warm autumn weather in northern Europe.
"Operating profit margin in the period has been in line with expectations, although lower than last year as a result of a higher level of mark-down," it added.
Primark's retail selling space expanded 11pc during the latest period, and will have 287 outlets across Europe by the end of this month.
The chain will open its first stores in the United States later this year, including a flagship outlet in Boston.
It has also signed leases to open stores in Connecticut, New York, Pennsylvania and New Jersey.
ABF is a conglomerate that has interests in groceries to agricultural products. It owns brands such as Ryvita and Twinings.
Primark expects its adjusted operating profit for the first half of its financial year - which ends on February 28 - to be lower than the £497m (€674m) it reported in the first half of the previous financial year.
(Additional reporting Reuters)