Ireland and rest of eurozone offset Primark's 'disappointing' UK sales performance

Ireland and rest of eurozone offset Primark's 'disappointing' UK sales performance

Discount clothing retailer Primark has reported a 4.5% year-on-year rise in sales for the 16 weeks up to January 4, driven by a strong performance in the eurozone, including Ireland.

Primark - which trades in Ireland as Penneys - said sales in eurozone territories were up by 5.1% year-on-year.

The company doesn't break down sales figures for its 37 Irish shops.

However, John Bason - finance director at Primark's parent Associated British Foods - said he was pleased with trading in Ireland during the period, noting growth in both total sales and in like-for-like sales.

Analysts viewed Primark's UK performance as "disappointing" despite a year-on-year sales increase of 4% being recorded and a winning of market share in a struggling British clothing market.

Like-for-like sales in the UK showed a "marginal" decline.

"Primark’s sales decline in the UK is disappointing, although not surprising considering the difficult environment for clothing retail, although the fact trading was good in November and December is encouraging," said Nicla Di Palma, retail analyst with Brewin Dolphin in London.

"Europe is improving, especially Germany where it is reducing space in some stores. Overall, for an exclusively brick and mortar retailer, I think Primark is doing okay," she said.

"While Primark's like-for-likes are likely to remain muted through 2020, a more benign foreign exchange backdrop should support margin in the second half," said Davy analysts.

Primark saw positive like-for-like sales movement in the US and expects to make a profit there this year.

However, Ms Di Palma does not see the US defining the company's future fortunes.

"I think we have reached a sort of 'steady state' and I don’t see the US as a game changer – there is plenty of competition in the value clothing sector in the US and I don’t see Primark becoming a major player in the country," she said.

Primark recently said the relocation of its sourcing, buying, and merchandising functions from the UK to its Dublin headquarters will support its international expansion.

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