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Primark Owner Pleased With US Entry, Blames Weather for Weak Sales Across Europe

Warm, wet weather across Europe put a damper on Primark’s sales in the weeks leading up to Christmas, Associated British Foods (ABF) said Thursday.

The budget fashion chain’s owner published a trading update that revealed sales at stores open for more than a year in the nine-week period ended Jan. 2 were weak as mild temperatures kept shoppers away from sweaters, coats, hats and scarves.

But comps for the seven weeks prior to that period were strong, ABF said, benefiting from a weaker performance the year before “when the autumn was unseasonably warm.” Thus, combined with an increase in selling space in the U.S. and Spain, sales on a constant currency basis for the overall 16-week cycle were up 7 percent.

“As expected, operating profit margin in the period was lower than last year, as a result of the stronger U.S. dollar. However, the margin reduction was lower than initially envisaged as a result of both an excellent performance from our buying teams and a lower level of markdowns arising from a well-managed stock position,” ABF said.

Primark pushes ahead with U.S. invasion

Primark plans to open six more stores in the U.S. this fiscal year, as well as one in the American Dream shopping mall in New Jersey in 2017, and ABF finance director John Bason told The Telegraph that the company is “pleased” with how consumers have responded to the chain’s debuts in Boston and Pennsylvania’s King of Prussia mall.

“People have loved the prices and the quality, as well as the fashion we’re offering. The brand awareness of Primark among American consumers is still low, so the fact we have positive feedback is good,” he said.

Additionally, plans are well under way for the opening of Primark’s first store in Italy at a shopping center in Milan in early summer and a second will follow in a mall north of Florence by the summer of 2017.

“We now expect the increase in selling space for the current financial year to be some 1.4 million square feet with a later phasing of handover of two U.S. stores,” ABF said.

Primark’s current portfolio comprises 299 stores worldwide, or 11.5 million square feet of retail selling space.