1H18 Pre-Close Trading Update

British conglomerate ABF reported its 1H18 pre-close trading statement for the 24 weeks ended March 3, 2018. This report will focus only on Primark, ABF’s retail segment.

Sales

ABF expects to report a 7% rise in Primark’s 1H18 sales at constant currency and a 9% rise as reported, driven by increased selling space. Management expects comparable sales to decline by 1% during the period, as growth was hindered by an unusually warm October—a month when comps saw a “significant decline.” Primark has performed well in the UK. Total sales grew by 8% during the period, driven by a 4% increase in comparable sales along with expanded selling space and breadth of Primark’s offer. The retailer continues to grow its business in the US.

Operating Margin

Management expects Primark’s operating margin for 1H18 to be similar to 1H17’s level, as better buying is expected to offset the adverse effects of the US dollar exchange rate on purchasing.

Selling Space

Primark’s selling space expanded by 0.4 million square feet since the last financial year end. As of March 3, 2018, the company will operate 14.3 million square feet of selling space across a total of 352 stores.

New Stores

During the period to date, seven new stores were opened across Germany, Portugal, France and the UK.

Outlook

In 2H18, management expects an acceleration in Primark’s profit growth, as a result of an improvement in margins over last year. Better buying and benefits from “the recent weakness of the US dollar on purchases” are expected to drive this growth. The company expects to add a total of 1.2 million square feet of selling space this fiscal year, of which an expansion of 0.5 million square feet is planned for the next quarter alone. ABF reports its half-year results on April 17, 2018.