Why Did Primark End Its 10 Years Of Crazy Expansion?

According to the world clothing shoes and hats net, leading the British / Irish cheap brand.

/ Penneys (hereinafter referred to as Primark) has gone through 10 years of crazy expansion.

The parent company Associated British Foods PLC (ABF.L) is now looking for a new chairperson to replace Charles Sinclair, which is about to expire.

Charles Sinclair's brilliant resume is mainly for Daily Mail and General Trust Plc Plc (DMGT.L) CEO of information media entertainment company. After joining the ABF board in 2008, he became chairman in 2009.

With the Primark revenue approaching 6 billion pounds, the market value of ABF PLC is also over 20 billion. However, in the last fiscal year, Primark came to a turning point. As of the 2016 fiscal year of September 17, 2016, the first time in the 16 years, Primark sales fell by 2%, while the sales of new stores expanded 11.3% to 5 billion 949 million pounds, and the fixed exchange rate increased by 9%.

Because the market is worried about the growth bottleneck of Primark, the stock price of ABF PLC has fallen more than 20% in the past year. The price of the company has doubled over the past 5 years and has risen by more than 110%. Therefore, the market estimates that the Weston family of ABF PLC major shareholder is trying to make changes to stimulate Primark's future.

The Weston family currently owns a 79.2% stake in the fund Garfield Weston Foundation, Wittington Investments controls the majority of ABF. ABF PLC is one of the rare companies in the FTSE 100 FTSE 100 index company that controls absolute control by a single major shareholder.

George Weston, one of the Weston family successors, is currently the chief executive officer of ABF PLC, and the 52 year old George Weston has started to master this dress, sugar and grocery group since 2005.

In the latest performance update at the end of February, ABF PLC predicted that the sales growth rate of Primark will be 11% in the first half fiscal year as of March 4th, and the mid term sales growth will be 21% higher than the actual exchange rate. But it is mainly driven by the growth of 12% of the retail area. The same store sales can only maintain the same level in the same period of the year. After excluding the influence of the Holland market, there will be a 1% increase and the overall performance will continue for the first quarter.

ABF PLC predicts that the Primark market in the UK will rise by 2% over the first half of the year, and the market share will also increase.

John Bason, the group's chief financial officer, pointed out at the conference call conference that there has been no sign of consumer spending cuts yet, and British consumers have more disposable income than last year.

But he expects the pound to depreciate later this year, the other effects of Europe, the new minimum wage standard and the first adjustment of commercial real estate tax in April 1st, 7 years ago.

Pricing pressure will increase, but they will not take the lead in raising the price. Primark is still committed to making the most cost-effective Street brand.

In the first half of the year, Primark stores opened 16 new stores and sales were strong, and the US business with 6 stores continued to grow.

As of March 4th, the brand will operate 329 stores worldwide with a total sales area of 13 million 100 thousand square feet.

The group said that the inventory management was good during the brand period, and the sales promotion rate was also in line with expectations. However, due to the strong influence of the US dollar on input costs, the operating profit margin in the medium term and full year will fall as expected.

Primark has contributed about half of its profits to ABF PLC.

ABF PLC will release its full interim results next Wednesday.

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