1H19 Results ABF reported results for 1H19, the 24-week period ended March 2. This report focuses on results for Primark, ABF’s retail business. Sales: Primark grew 1H19 sales 4.0% at constant currency to £3.63 billion (also up 4% as reported), marginally beating the consensus estimate of £3.62 billion. Sales growth was driven by increased retail selling space: Comparable sales fell 1.5%. ABF noted that Primark continued its strong performance in the UK region as sales increased 2.3% year over year. UK comparable sales grew 0.6%. The company noted that its share of the UK’s total clothing, footwear and accessories market increased substantially. Lower traffic in November was offset by good trading in all other months of the first half, with strong growth in the last two weeks of the period. In the eurozone, sales grew 5.3% at constant currency, but same-store sales fell 3.2% due to a decline in the German market and a fall in traffic in November across all markets. Primark saw strong sales growth in Spain, France, Italy and Belgium. The US continued to perform strongly, driven by strong trading at the recently opened Brooklyn store, coupled with robust same-store sales growth. A reduction in selling space at Freehold and Danbury in the US last year reduced the US operating loss. Operating Performance: Primark grew its adjusted operating profit 25.0% both at constant currency and as reported to £426.0 million, beating the consensus estimate of £421.6 million. An early positive response to its summer/spring range positively impacted the performance, the company said. Operating margin expanded 190 basis points to 11.7%. The positive impact of a weaker US dollar on input costs related to purchases, better buying and stock management, and reduced markdowns drove the margin improvement. Selling space: During the period, Primark opened four new stores and expanded retail selling space by 300,000 square feet since the previous financial year end. Primark closed 1H19 with a total estate of 364 stores trading from 15.1 million square feet. During the period, Primark opened new stores in Seville and Almeria in Spain, Toulouse in France and a city centre store in Berlin. Outlook Primark maintained its earlier guidance for FY19, with adjusted operating profit and adjusted earnings per share for FY19 expected to be in line with FY18. For 2H19, the company expects operating margin to narrow due to the effect of a stronger US dollar on purchases. In the eurozone, the company plans to reduce selling space at a small number of stores in Germany to optimise the cost base. Overall, Primark looks to add 950,000 square feet of new selling space this fiscal year, including stores in new locations and additional space from relocations. At the same time, store closures and downsizings will drive an expected reduction of about 150,000 square feet this year. In the third quarter, the company plans to add a net 400,000 square feet of selling space. Primark will open new stores in Utrecht in the Netherlands, Bonn in Germany and first store in Slovenia, in Ljubljana.