Cheap Clothing Brand Primark Mid Term Profit Soared 25%

Primark, a cheap fast fashion retailer in the UK, has a 25% surge in operating profit in the first half of fiscal year. The sugar business is only able to maintain the breakeven Associated British Foods PLC (ABF.L) Ying Lian food group (ABF).

In the first half of March 2nd, Primark revenue rose 4.4%, from 3 billion 477 million to 3 billion 630 million pounds, while the same store sales recorded a 1.7% decline in the same period. However, sales in the same store in the UK increased by 0.6%, but sales increased by 2.3%.

The euro area recorded a 5.3% increase in fixed exchange rate, but the same store sales fell by 3.2%, mainly due to the weak economic impact of the European Union's German market, while Spain, Belgium and Italy and France were strong.

New stores and old stores in the US continue to show strong performance and business losses narrowed sharply.

ABF said that in order to control costs, Germany's sales area would be reduced, and the business model of small shops would be reduced.

Despite its negative store sales, George Weston, the group's chief executive, said the group's world-renowned cheap clothing accessories brand had a strong business profit margin in the first half of the year, an increase of about 200 basis points, from 9.8% to 11.7%, an increase of 24.9% in the operating profit period, from 341 million pounds to 426 million pounds, while the overall operating profit of ABF in the first half of fiscal year was only 534 million pounds, mainly because the operating profit of sugar business dropped from 106 million to 1 million pounds.

The increase in operating margins was mainly due to the weakening of US dollar in purchasing currencies, while inventory management and price reduction were improved.

ABF maintains that Primark's annual operating margin is expected to remain unchanged. It is expected to add 950 thousand square feet of sales area throughout the year, including 300 thousand square feet in the first half of fiscal year, 400 thousand square feet in the three quarter and 250 thousand square feet in the fourth quarter.

Author: Li Yan