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Primark Sales Up 7.5%; Chain on Track to Open 6 US Stores in 2016

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Primark Oxford Street

Six more Primark stores are set to open in the U.S. in 2016 and the cheap clothing chain’s owner, Associated British Foods (ABF), said trading at the two stateside locations that opened last year has been “encouraging.”

ABF, which also has a grocery division, published preliminary half-year earnings on Monday and said its adjusted profit for the six months ending Feb. 27 will be better than expected, helped by a rebound in sales at Primark.

“Following a strong performance at the start of the financial year, trading was weaker in the weeks leading up to and over Christmas as a result of unseasonably warm weather across northern Europe,” the company said in a statement, noting that sales are expected to be 7.5% ahead of last year at constant currency, driven by increased retail selling space, and 4 percent ahead at actual exchange rates. Cumulative comps, meanwhile, have improved since last month’s trading update.

“France remained buoyant with strong like-for-like sales in the period despite the very high sales densities achieved by these stores in their first year of trading,” ABF added. “As expected, the impact of new store openings on the like-for-like sales in existing stores in Germany and the Netherlands has eased. Early trading at our two new stores in the U.S. has been encouraging with the range and concept being well received.”

The company also said that operating profit margin in the six-month period has been better than expected, citing “good buying performance” and fewer markdowns arising from a “well-managed stock position.”

Primark also increased its selling space by 300,000 square feet since the financial year end and come Feb. 27, 299 stores will be trading from 11.5 million square feet worldwide.

“We opened a net six new stores in the period including a flagship, 133,000-square-foot store on Gran Via in central Madrid in October and our second store in the U.S. at the King of Prussia mall in Pennsylvania at the end of November,” ABF said. “We expect to open a further six stores in the U.S. later this calendar year and a 70,000-square-foot store in the American Dream shopping mall in New Jersey in calendar 2017.”

Plans are also under way for the upcoming opening of the company’s first Italian store in Milan in April, while a second is slated for Florence by the summer of 2017, and the company expects to add a further 1.4 million square feet of selling space in the current financial year. ABF said it’s also making a “significant” investment in its warehouse infrastructure.

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