Primark primed for growth as profits leap — but snubs push into online

Finance chief John Bason said: “There’s a lot of space left to open — not in the UK. We’re going into central and eastern Europe. I don’t think we’ll run out of opportunities.”

The budget retailer, owned by Associated British Foods (ABF), saw sales increase by 4.4% for the half year to March 24, thanks largely to opening stores in Europe and the US.

Same-store sales, which exclude sales from new stores, fell 1.5%, dragged down by Germany, where the business has been struggling.

Bason said that although it won’t pull out of Germany, the retailer wants to cut the amount of store space it sells from: “We haven’t been performing there well enough, we have too much trading space.” Revenues rose 4% to £3.6 billion at Primark, while profits grew 25% to £426 million thanks to higher margins, accounting for the bulk of ABF’s £639 million profits.

Although Primark has been “teasing” shoppers about click-and-collect trials, Bason insisted it will be a while before it starts selling online, where low margins mean there’s little profit. He said: “We have to keep looking at it but there’s no pressing need to get further into trading online.”

Primark has seen a rise in its spring and summer ranges, its sustainable cotton jeans flying off the shelves, defying the gloom engulfing many High Street retailers. The food-to-fashion group, which owns Twinings tea and sugar substitute Truvia, posted a 1% rise in revenues to £7.5 billion and kept guidance for the year unchanged.

ABF’s struggling sugar business is showing early signs of recovery, said Investec’s Kate Calvert, despite a 13% fall in revenues.

No tears at Boohoo as young still spend

Fast-fashion retailer Boohoo on Wednesday said youngsters were unconcerned by Brexit and still splashing the cash.

Chief financial officer Neil Catto said: “[Our] young customers are not worried about Brexit and they’re spending money on clothes. We’re not experiencing any kind of slowdown.”

The business, which also owns online brands PrettyLittleThing and Nasty Gal, saw pre-tax profits grow by 38% to £60 million from £43 million. Revenues jumped 48% to £857 million.

“As clothing players such as Topshop and New Look fail to convince young consumers to purchase, the Boohoo group has gone from strength to strength,” said GlobalData retail analyst Emily Salter.

The shares gained 7p to 224p.