Primark’s like-for-like sales increased 7% in the 24 weeks to the start of March, a performance described as “exceptionally strong” by owner Associated British Foods.
It was also helped by an “ideal combination” of lower cotton prices, better exchange rates and lower markdowns as operating profits surged 55% to £238 million at the 257-store chain.
Once new 15 new store openings were factored in, sales raced 24% ahead to almost £2 billion.
The retailer’s growth drove a 25% surge in adjusted pre-tax profits to £452 million at AB Foods, which also owns British Sugar as well as household brands Kingsmill, Ryvita and Twinings.
Chairman Charles Sinclair said: “The Primark success story continues. Trading in the period was very strong, the profit margin was much improved, customers in continental Europe have taken enthusiastically to the Primark brand and there is very real momentum in the addition of selling space.”
Primark’s performance is in sharp contrast with poor clothing sales at retail bellwether Marks & Spencer, where recent cold weather and weak consumer spending drove general merchandise sales down 3.8% in the first three months of the year.
Primark added 0.7 million sq ft of selling space during the half, and new stores included a second branch on London’s Oxford Street, a relocation in Sunderland and six more outlets in Spain.
The retailer’s European expansion is set to continue, with plans for its first stores in France in its next financial year.
However, its pace of expansion will slow during the rest of this financial year, with another 100,000 sq ft of space mainly confined to extending its Newcastle and Manchester stores.
For the full year AB Foods expects strong profit growth at Primark, but not at the same pace as its first half as cotton prices level out.
Revenues at AB Foods surged 10% to £6.3 billion and the group lifted its dividend 10% to 9.35p per share.
Despite the squeeze on consumer spending, its grocery arm grew profits by almost 30% to £97 million, boosted by a Twinings advertising drive in the UK. AB Foods said its bakery arm managed to recover costs in a “highly competitive” bread market.
Its sugar business grew sales but recorded a 5% fall in profits to £163 million as trading in China deteriorated. AB Foods said lower European sugar production and lower prices in China will continue to weigh on the division.
Shares in AB Foods were up about 2% on the results.