Primark boosted by record Christmas
A WEAK dollar will boost Primark's buying power and help lift the chain's second-half profits, owner Associated British Foods (ABF) has predicted.
The retail chain, which is headquartered in Dublin and trades as Penneys in Ireland, said the improvement will come on the back of a lacklustre performance during the first half of ABF's financial year, with like-for-like sales expected to be down 1pc of the period. The chain's sales were curbed by warm weather in October, said ABF.
However, following that spell of unseasonable weather, Primark's like-for-like sales improved, and the chain also posted record sales in the week before Christmas.
Overall sales at Primark for the first half of ABF's financial year are expected to be 7pc ahead of the £3.2bn (€3.6bn) it notched up in the first half of the 2017 financial period. The Primark chain made a £323m (€367.8m) operating profit in that period. The chain accounted for 54pc of ABF's £1.36bn (€1.5bn) operating profit in the last financial year, and 46pc of its £15.3bn (€17.4bn) in revenue.
"We expect an acceleration in Primark profit growth in the second half as a result of an improvement in margin over the same period last year," noted ABF in a trading statement.
"This will be driven by better buying and some benefit of the recent weakness of the US dollar on purchases which will more than offset an expected return to a more normal level of markdowns, compared to the very low level achieved last year."
ABF said that Primark is performing very well in the UK, with sales 8pc ahead of last year, while it has also increased its share of the total clothing market there.
The group - whose activities stretch from sugar production to ownership of grocery brands such as Ryvita, Twinings and Ovaltine - said that its Primark business in the United States "continues to make progress". It's aiming to open its ninth store in America, in New York's Brooklyn, in the second half of the financial year.
Seven new Primark stores opened during the first half of ABF's financial year.
ABF is controlled by the Weston family, which owns Brown Thomas and Arnotts.