Primark defied the High Street gloom as it ramped up store openings and grew sales – despite not having a shopping website.
UK sales from existing stores grew by 3 per cent in the 24 weeks ending March 3, allowing owner Associated British Foods (ABF) to boost the interim dividend by 3 per cent to 11.7p per share.
Shares increased 4.1 per cent as the retail and food group said profits at Primark were likely to rise in the second half of the year.
Revenues within the division increased by 8 per cent to £3.5billion during the period, while profits were up 6 per cent to £341million.
UK sales from existing Primark stores grew 3%in the 24 weeks ending March 3, allowing owner Associated British Foods (ABF) to c boosted the interim dividend 3% to 11.7p per share
While high street rivals have struggled, Primark continued to open new shops and is adding 1.2m sq ft of store space during the current financial year.
Sofie Willmott, retail analyst at Global Data, said the store had bucked the trend of other firms, which were banking on growth in online, to offset falls on the High Street.
‘Primark has demonstrated once again that it does not need a transactional website to thrive in the UK market,’ she said.
‘At a time where major retailers such as Marks & Spencer, Next and New Look are reviewing their large store portfolios, Primark has continued to open stores.’
Helen Merriott, lead retail partner at Ernst & Young, said Primark’s success was partly down to the shopping experience that it offered its customers.
‘Retailers need to have something they’re best at, and what Primark is best at is, as a customer, being able to go in there and spend £20 and come out with a whole bag of clothes. What makes Primark a fun place to shop in is the joy of the hunt.’
Unusually warm weather in parts of Europe last year dragged on Primark’s overall sales as coats, scarves and gloves proved difficult to shift.
Like-for-like sales across the entire Primark business fell 1.5 per cent. Yesterday ABF said the first Primark stores in the US were producing encouraging results, but it needed to learn more about the market before considering a major roll-out.
Primark opened its first US store in Boston in 2015 and now trades from eight locations. A ninth will open in Brooklyn, New York, this year and a tenth in Florida in 2019.
Analysts see Primark’s expansion as the critical driver of AB Foods’ prospects and consider the US as a potential game changer.
ABF chief executive George Weston said: ‘We’re quietly encouraged by what we’re seeing so far. We continue to learn but it’s still very early days.’
As expected, ABF’s sugar business suffered with significantly lower prices for the commodity in the EU hitting its bottom line.
Profits tumbled 30 per cent to £603million, which ABF also attributed to the sale of it US herbs and spices business and China sugar cane operations a year earlier.
Across the wider group, which also owns Twinings tea and Kingsmill bread, revenues edged up by 2 per cent to £7.4billion while underlying half-year pre-tax profits rose 1 per cent to £628million.