Associated British foods...25 Feb 2019 07:57
Trading statement retail excerpt published this morning..
Retail
Sales at Primark are expected to be 4% ahead of last year in the first half, at both constant currency and actual exchange rates, driven by increased retail selling space partially offset by a 2% decline in like-for-like sales. With a much higher margin, profit is expected to be well ahead of the same period last year. Early trading of the new spring/summer range has been encouraging.
The UK continued to perform well and we substantially increased our share of the total clothing, footwear and accessories market, with sales 2% ahead of last year. Cumulative like-for-like sales have improved since the January trading update. The effect of low footfall in November was offset by good trading in all other months, and like-for-like sales are expected to be level with last year in the first half.
Sales in the Eurozone are expected to be 5% ahead of last year, with particularly strong sales growth in Spain, France, Italy and Belgium. Like-for-like sales in the Eurozone are expected to show a decline of 3%. In Germany we have strengthened management and plan focused marketing to address trading which continues to be difficult. Preparations are underway to reduce selling space at a small number of German stores in order to optimise their cost base.
Our business in the US continues to perform strongly, driven by excellent trading at our recently opened Brooklyn store combined with like-for-like sales growth. This, coupled with the benefit to store profitability arising from the reduction in selling space at Freehold and Danbury last year, has much reduced the US operating loss.
As expected, the effect of a weaker US dollar on purchases contracted for the first half benefited input costs. With better buying, tight stock management and reduced markdowns, operating margin for the first half is consequently expected to be well ahead of last year.
Foreign exchange contracts are now in place for the majority of the remaining purchases for the year and the strengthening of the US dollar will result in a lower operating margin in the second half. Our expectation for full year operating profit is unchanged.
Retail selling space increased by 0.3 million sq ft since the financial year end and, at 2 March 2019, 364 stores will be trading from 15.1 million sq ft compared to 14.3 million sq ft a year ago. Four new stores were opened in the period: Seville and Almeria in Spain, Toulouse in France and a city centre store in Berlin, Germany. In the UK we relocated to larger premises in Harrow and the Merry Hill store was extended.
We still expect to open 0.9 million sq ft of new selling space in this financial year. In the next quarter a net 0.4 million sq ft of additional selling space is planned, with new stores in Hastings, Bluewater, Belfast and Milton Keynes in the UK, Bordeaux in France, Brussels in Belgium, Wuppertal in Germany and Utrecht in the Netherlands. Our smaller store
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