Irish fashion chain Primark has seen its turnover grow more than 20 % in the past six months, but that was only thanks to new store openings and positive exchange rate fluctuations.
Fourteen new stores
Primark’s total turnover reached 3.22 billion pounds (3.85 billion euro) for the first half of its fiscal year, up 21 %, but this would only have been an 11 % increase at stable exchange rates. On a like-for-like basis, the subdivision of Associated British Foods would have seen its turnover stay flat. Operational profit grew 3 % to 323 million pounds (386 million euro), but that would be - 2 % at stable exchange rates. Turnover in the United Kingdom grew 7 % and 2 % on a like-for-like basis.
In this time frame, Primark has opened fourteen new stores, adding 12 % more store space compared to the year before. This means that its growth, at level exchange rates, is slightly lower than its store space’s growth. Dutch turnover grew 18 %, but it also added 32 % in store space, which basically means its like-for-like turnover dropped in the end.
Primark also warns that its profits will face increased pressure for the second half of its fiscal year, mainly because of Zara and H&M’s strong competitive position. The Irish chain seeks to be the cheapest and that strategy cuts into its profit margins. Therefore, in order to maintain its growth, it will continue to open new stores.