Sales put spring in the step of Primark

DISCOUNT fashion chain Primark continues to steal customers from rivals with sales in its spring quarter rising 15 per cent, outperforming its competitors.

Primark owner Associated British Foods gave an upbeat update, saying its third quarter sales jumped 13 per cent and it expects very strong growth in annual earnings, driven by Primark.

Primark said sales had been boosted by a strong line of floral print dresses, court shoes and accessories in its key markets of Britain, Ireland and Spain.

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The fashion chain, which has 11 stores in Yorkshire, did not give a like-for-like figure for the 16 weeks to June 19, but house broker Panmure Gordon calculated Primark growth at seven per cent, way ahead of rivals.

ABF, which also owns household brands Kingsmill, Silver Spoon and Twinings, said Primark was enjoying an "excellent year".

Primark trades from 198 stores and is due to open another five this year, including sites in Harrogate and Scunthorpe.

The chain's revenues were up by 17 per cent in the first 40 weeks of the company's financial year.

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ABF said the slight weakening in the revenue trend in recent weeks reflected the impact of the weaker euro against sterling.

It added that margins were ahead of last year as the benefits of increased volumes more than offset higher freight charges.

The company's grocery arm saw revenue growth of five per cent in the spring quarter, helped by good growth from Twinings Ovaltine after a poor showing last year and a strong performance by Kingsmill in the face of strong competition.

The relaunch of Indian food brand Patak's and a promotional drive behind Jordans and Ryvita boosted growth in its Whole Foods business.

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Revenues from the sugar division were 44 per cent ahead of last year due to the acquisition of Spanish firm Azucarera and an excellent season for its UK business, which produced 1.3 million tonnes of sugar.

The Primark stores have coped with the downturn better than rivals as its cheap fashionable clothes have proved a hit with cash-strapped shoppers.

But finance director John Bason added a note of caution due to general economic conditions in Western Europe.

"Wider consumer sentiment might start to weigh into next year," he said.

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Analyst Jeremy Batstone-Carr at Charles Stanley said: "Investor interest in Primark remains elevated given intensifying pressure on discretionary spending in the wake of the emergency Budget. So far Primark appears to have withstood a tough operating environment."

Panmure analyst Graham Jones said: "Another upbeat trading statement from ABF, with Primark in particular impressing."

Primark's performance came after Britain's biggest clothing retailer Marks & Spencer posted a third consecutive rise in underlying April-June quarterly sales of 3.6 per cent on Wednesday but also sounded a cautious note.

The rise and rise of a fashion chain

Primark moved into Britain from Ireland in 1973 with four out-of-town stores.

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The following year saw the opening of the first UK high street stores in Derby and Bristol. In the next ten years, 18 stores were added in the UK.

From 1984 to 1994 a further 13 stores were opened in Britain. In 1995 the group bought the BHS One-Up discount chain. As a result, 16 stores were added to the UK business, most in the Greater London area, and all of a significant size.

The next major development occurred in 1999 with the acquisition of 11 stores from the Co-Op In 2000 Primark acquired 11 C&A stores which brought store numbers to 108.

Between 2004-2005, 14 new units were opened, adding over 400,000 sq.ft. of retail space.

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In 2005, six stores were acquired from Allders. In July 2005, ABF bought Littlewoods' 120 stores.

Of these 41 were rebranded as Primark.

In May 2006, Primark opened its first shop in Spain in Madrid and its first one in the Netherlands in December 2008.

A year later it expanded into Portugal, Germany and Belgium.