Associated British Foods (ABF), the parent company of fashion retailer Primark, has posted a 1% increase in profit for the first half of the year to £648m.
This increase was driven by a 4% rise in operating profit at Primark despite facing unseasonable weather in its key European markets.
Sales at Primark for the 24 weeks to 3 March were 7% ahead of last year at constant currency, driven by increased retail selling space, and 8% ahead at actual exchange rates.
Like-for-like sales for the group however declined 1.5% for the 24 weeks. Sales were said to have been held back by “unseasonably warm weather in October” with a significant decline in the like-for-like measure in that month. The last week of the period was also reported to be challenging with “freezing temperatures across northern Europe”.
ABF said that its UK performance was “remarkable in the circumstances and delivered a strong increase in our share of the total clothing market”.
In the trading update ABF said: “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. This will be driven by better buying and some benefit of the recent weakness of the US dollar which will more than offset an expected return to a more normal level of markdowns, compared to the very low level achieved last year.
“Retail selling space increased by 0.4 million sq ft since the financial year end and, at 3 March 2018, 352 stores were trading from 14.3 million sq ft which compared to 13.1 million sq ft a year ago.”
Primark also revealed plans to open two new stores in and Burnley and Westfields, as well as seven new international stores during the second half of the financial year.