Primark — the Dublin-founded discount clothing retailer which trades here as Penneys — saw a 7% jump in sales, in constant currency terms in the first quarter of its financial year, which runs to early January.
The performance was included in that of parent group, Associated British Foods (ABF), which yesterday reported a 2% drop in group revenue for the 16 weeks to January 2 at actual exchange rates, but a 3% jump in constant curreny terms.
Regarding Primark, total sales were only 3% ahead of the corresponding period the previous year due to the weakening of the euro against sterling.
However, the retailer still saw strong like-for-like sales performances across its stores in the first seven weeks of its financial year, benefiting from comparison with a weaker performance in the prior year when the autumn was unseasonably warm.
The following nine weeks saw weaker like-for-like sales due to warmer and wetter weather across Europe, leading up to Christmas.
Consumers in Primark’s core market of Britain avoided buying winter clothes during some of the country’s mildest November and December temperatures, with retailers Next and Marks and Spencer blaming the weather for disappointing sales before Christmas.
Primark sold fewer coats, hats, scarves and thermal clothes, causing sales at shops open more than a year to fall in the nine weeks to January 2 compared with the same period the year before.
Since hitting an all-time high in early December, ABF’s share price has lost 16% on concerns about the impact of the weather.
Finance director John Bason said the weaker pre-Christmas performance was nothing to worry about. “It’s specific to those weather related items,” he said.
“The scale of operating margin decline at Primark was lower than initially envisaged by ABF,” said Jack Gorman of Davy Stockbrokers.
“Effective buying and a lower level of markdowns were the principal reasons for this, acting as a potential offset to the lower like-for-like in the period.”
After its successful entry to the US last year, 2016 will see Primark open six more US stores as well as its first Italian outlet in Milan, which will be followed by a shop in Florence next year.
Additional reporting Reuters.
© Irish Examiner Ltd. All rights reserved