Primark’s moves into US market ‘well-advanced’

Primark’s expansion into the US is “well-advanced”, with the Dublin-headquartered discount clothing retailer set to open its first store there this year.

The retailer — which trades here as Penneys — has signed eight store leases in the north-east of the US, with openings in New York, New Jersey, and Pennsylvania anticipated in the coming months.

George Weston, chief executive of Primark’s parent, Associated British Foods (ABF), said the retailer’s strong performance recently has been driven by “significant expansion of selling space” and superior trading of relatively newly-opened stores. He said plans for the US entry “are well-advanced”.

Mr Weston was speaking on the back of ABF’s latest set of interim results, covering the six months to the end of February.

On a group-wide basis, ABF — whose interests span ingredients, retail, grocery, and agriculture — saw first-half revenue rise by 3%, in constant currency terms, to almost £6.25bn (€8.7bn). On the same measurement basis, adjusted operating profit was down 2% at £474m, while adjusted pre-tax profits dipped 4% to £450m.

However, the strength of sterling against most of the group’s trading currencies and the transactional impact of euro weakness on the results of the Primark and British Sugar divisions have led management to expect “a modest decline” in adjusted group earnings per share for the financial year up to the end of August.

Primark’s first-half revenues, meanwhile, rose by 15%, in constant currency terms, to £2.55bn, with operating profit ahead by 11% at £322m.

“The UK delivered a positive like-for-like performance, and Spain, Portugal, and Ireland all performed very strongly,” management noted.

Jack Gorman of Davy Stockbrokers said: “Primark sentiment remains the dominant driver for the stock and, in that regard, growth plans remain on track to accelerate into 2016 with the US launch.

“The [ABF] stock has withstood a profit collapse in Sugar over the last two years, but Primark growth should materialise in much stronger group growth in 2016/17.”