Primark sales surges as warm weather dresses up profits

http://www.theguardian.com/business/2014/jul/10/primark-sales-surge-warm-weather-dresses-profits

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Sales at cut-price fashion chain Primark surged this spring as shoppers snapped up playsuits, kimonos and long floaty dresses in the warm weather.

Analysts said the pace of growth in established stores had doubled to 8% in the three months to 21 June, compared to 4% in the previous quarter, partly helped by the later timing of Easter. The company said sales at the fashion chain, which now has stores in nine countries, rose 22% as it added just over 11% more store space.

"There's no doubt the good weather compared to last year when it was cold and the timing of Easter helped," said John Bason, finance director of Primark's parent company Associated British Foods (ABF). "But when we went into May and June and got beyond that our [underlying sales] were building on that growth."

He said Primark was seeing more customers visiting its stores and those shoppers were also tending to spend more. "With the better economy the consumer is feeling better. People are still careful with their money but when they come to Primark they are buying more items than they were a year ago," Bason said.

Sales at new stores in France were particularly strong as Primark's fashions, particularly maxi-dresses, are proving a hit with French women. "Our three stores around Paris are doing incredibly well," Bason said. "It gives us confidence that France is going to be a strong country for Primark."

The strong sales at Primark helped ABF offset poor trading at its sugar division where revenues slumped 20% at constant currency rates as a result of lower sugar prices and weaker sales in Europe. Grocery revenues were also down 7% after the company loast a contract to provide Asda with Silver Spoon sugar.

Despite those issues, the company said that Primark's growth meant it would now achieve a slight rise in profits, having previously expected only to match those achieved last year.

James Grzinic, an analyst at Jefferies, said that rise in profit would be "impressive in the context of a £50m foreign exchange profit hit and £20m of sugar restructuring charges."