FY18 Pre-Close Trading Update British conglomerate ABF reported its pre-close trading update for FY19, which ends on September 14. This report will focus only on Primark, ABF’s retail segment. Primark expects FY19 sales to be up 4%, at both constant currency and actual exchange rates, driven by an increase in selling space; this compared to the consensus estimate of 4.5%. The retailer saw a 2% decline in comparable sales, versus the consensus estimate of (1.8)%. Growth accelerated in the final quarter, supported by stronger comp growth. ABF says Primark has gained share in the UK, with UK total sales up 3% and UK comps down 1% in FY19. Eurozone sales are expected to be up 5% at constant currency, supported by “particularly strong” growth in Belgium, France, Italy and Spain. Eurozone comparable sales declined by 3%, driven by a weak performance in Germany; the company has strengthened management and launched focused marketing in Germany. In the US, Primark “continued to deliver strong sales growth,” with positive comparable sales growth. Lower operating costs arising from the downsizing of three stores will result in a “significantly reduced” US operating loss. The retailer will open its 10th US store at American Dream, New Jersey in the fall, and an 11th store at Sawgrass Mills, Florida in 2020. The operating margin in 1H19 was 11.7%, versus 9.8% in the prior-year period, driven by a weaker dollar, better buying and tight stock management. Margin will be lower in 2H19, impacted by a stronger dollar. Management continues to expect to report a full-year increase in operating margin. Primark increased retail selling space by a gross 0.95 million square feet in the year, with 14 new store openings: four in the UK, three in Germany, two in Spain, two in France and one each in Belgium, the Netherlands and Slovenia. Outlook Management expects to see a reduced margin in FY20, due to the strengthening of the dollar and the weakening of the pound. It anticipates some mitigation with reduced materials prices, favorable FX rates in sourcing countries and better buying. In FY20, the retailer is planning to add a net 1 million square feet of additional selling space, weighted to the second half, with 19 new stores plus a number of relocations and extensions. ABF will report FY19 results on November 5.