Penneys owner delivers first same store sales growth in two years

Like-for-like growth in US and euro zone offset Primark slippage in UK

 

Primark’s same-store sales rose for the first time since 2017 in its most recent trading period, as it warned of a small decline in the UK that was offset by growth in the US and a “notable improvement” in Germany.

Across the whole of Primark, or Penneys as it is known in Ireland, sales were up 4.5 per cent at constant exchange rates in the 16 weeks to January 4th, although this was “almost entirely” due to new space.

UK same-store sales fell slightly, though total revenue increased 4 per cent driven by new openings, outpacing high street rivals. The company declined to provide a figure for the same-store sales decline, but did not dispute analysts’ estimates of a 0.5 per cent fall in the UK.

John Bason, finance director at Primark’s parent company Associated British Foods (ABF) said December was a strong month for Primark, in contrast to others such as Superdry and John Lewis, which reported weak trading between Black Friday and Christmas.

A management overhaul in Germany, where consumers have given Primark a cool reception, has resulted in better trading.

Primark is now ABF’s most significant business, with analysts at Barclays expecting the chain to deliver £1 billion in profit for the first time this financial year - about two-thirds of the forecast group total.

In the conglomerate’s other divisions, sugar revenue was 7 per cent ahead of last year at constant currencies, with increased EU sugar prices in particular set to drive “a material improvement” in the group’s sugar profits this year.

The company’s operations in Spain and China will deliver substantially better results, it said, although domestic sales at South African venture Illovo were affected by lower consumption and increased imports.

Sales at the grocery business, whose products include Twinings teas and Dorset Cereals, were unchanged although margins improved.

Shares in ABF, which is controlled by the Weston family, finished 4.15 per cent higher in London trading at £26.61. – Copyright The Financial Times Limited 2020