Associated British Foods (ABF) maintained its earnings forecast Monday as sales at Irish fast-fashion chain Primark, expected to have increased 13 percent in the year ending September 12, helped counterbalance a currency hit.
Primark, which is set to open its first U.S. location in Boston on Thursday, accounts for more than half of ABF’s annual profit. The retailer’s rising sales were driven by the addition of nearly one million square feet in selling space as well as “very high sales densities” at stores opened in the past year, particularly in France, its “most successful new market entry to date.”
But ABF said it still expects a decline in adjusted earnings per share for the full year as a result of the slumping euro, a strong sterling and U.S. dollar and the recent weakening of local currencies in the firm’s emerging markets.
At actual exchange rates, Primark sales will be up 8 percent, compared to the same period last year, while ABF’s total profits will be impacted to the tune of 30 million sterling (or $46 million).
“Primark sources much of its merchandise in dollars,” the firm said, “[which] will have an adverse effect on margins in the new financial year. However, as anticipated, a good proportion of the impact has been successfully mitigated by our buying teams as they firm up orders for next year.”
Primark currently has 293 stores and 11.2 million square feet of selling space worldwide, with some 1.5 million square feet scheduled for the new financial year in the U.S, Spain and the U.K. Following the Boston store opening this week, a second U.S. location will open at the King of Prussia Mall in Philadelphia on November 30, and the company expects to have a total of seven stores stateside by 2016.