Primark, the low-cost clothing retailer headquartered in Dublin and which trades here as Penneys, has indicated that it is open to the idea of opening more stores in Ireland, writes Geoff Percival.
The suggestion comes on the back of a strong year for the retailer but coincides with shop owners in the UK suffering their worst October for nearly a decade.
Primark generated revenues of £7.05bn (€7.99bn) for the 12 months to September 16, up 19% on the previous year.
The retailer’s performance largely drove the year for parent group Associated British Foods (ABF), which saw overall revenues rise 15% to £15.4bn, and adjusted pre-tax profits jump 22% to just over £1.36bn. ABF also saw revenue growth across its other segments of sugar, ingredients, grocery, and agriculture.
A Primark spokesperson said while there are currently no concrete plans to open more Penneys stores in the Republic — there was one opening in the last financial year, among a spate of net outlets across mainland Europe — there is a plan to extend the main Primark outlet in Belfast.
However, in its commentary on Primark in its annual results, ABF highlights the “major success” of its new store in Liffey Valley in Dublin, saying it “demonstrates the opportunity for further selling space expansion in our more established markets”.
After launching in the US in 2015, Primark will open its ninth store there — in Brooklyn — next summer. However, it has a challenge in raising awareness of its brand in the US, where three existing stores are set to be downsized in order to “optimise efficiency”.
Currently 15 of Primark’s top 20 stores, by sales density, are located in mainland Europe, which could prove important as retail conditions tighten in the UK — albeit where Primark opened 11 new stores in its latest financial year and sales rose 10%.
ABF said a further expansion of selling space, in its current financial year, should boost retail profits at Primark.
That aforementioned tightening in the UK retail market was evident yesterday, with new figures showing British shoppers cut back their spending last month at the fastest pace for any October since 2008 — a reminder of the strain on UK household budgets even before the Bank of England raised interest rates.
UK retail sales declined by an annual 1%, on a like- for-like basis, which strips out changes in store size, according to the British Retail Consortium. Sales rose 1.9% in September.
Payments company Barclaycard also reported weak consumer spending, with a split between spending on essentials and spending on discretionary items. Last Thursday, the Bank of England raised interest rates for the first time in more than 10 years, despite a slowdown in economic growth this year.
The BRC said its figures were a cause for concern ahead of Christmas. “The decline was driven by the worst performance of non-food sales since our record began in January 2011,” said chief executive Helen Dickinson.
The BRC, whose figures are not seasonally adjusted, said total sales last month edged up 0.2%, which was also the weakest increase for any October since 2008.
Ms Dickinson said last week’s rate hike — the first in more than a decade — would add more pressure on household budgets.
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