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Primark Emerges as Christmas Winner as Sales Rise Overseas

Primark contributes more than half of AB Food’s profits and its healthy performance will cheer the market.

Primark Emerges as Christmas Winner as Sales Rise Overseas
Shoppers hold carrier bags from Primark Stores Ltd., operated by Associated British Foods Plc, and Selfridges Ltd. as they stand on Oxford Street in central London, U.K.(Photographer: Simon Dawson/Bloomberg)

(Bloomberg) --

Primark’s first pet clothing line boosted Christmas sales, with the discount retailer crediting strong demand for unicorn, hotdog and bumblebee-themed outfits.

Items for cats and dogs helped the company report a 4.5% sales gain in constant-currency terms in the last months of the year, the retail chain owned by Associated British Foods Plc said Thursday. Primark outperformed retailers such as Marks & Spencer Group Plc, whose gifting ranges failed to attract customers.

Primark contributes more than half of its parent company’s profit, and its performance cheered investors after fears that lower traffic on Britain’s shopping streets over Christmas might have hurt sales. Shares of Associated British Foods rose as much as 3.2% in London.

Although Primark’s comparable sales in the U.K. declined slightly, this was expected and was offset by a pickup elsewhere in Europe, particularly in France. Primark increased its market share in the U.K. with particularly strong sales in November and December despite a “soft market,” Finance Director John Bason said by telephone.

The chain expects to open 18 stores this year, including one in the U.K. and its first outlet in Slovenia as well as a second store in Poland.

In the U.S., where Primark has nine stores, sales grew on a comparable basis and Bason said the store in Brooklyn was “incredibly profitable.” Even though Primark had to make some changes to its early strategy in the U.S., including shrinking some stores, that did not hurt sales, he said.

The recovery in continental Europe means Primark’s overall like-for-like sales in first quarter, which the company did not disclose, were slightly positive for the first time since 2017, according to Warren Ackerman and colleagues at Barclays Plc. They forecast “a landmark” 1 billion pounds ($1.3 billion) of profit for 2020.

Another retailer, Halfords Group Plc, also delivered good news. The auto-supply and cycling company reported sales gains, led by its bike unit, and maintained its outlook on profit for the full year. That relieved investors, given that the chain has issued a profit warning a year ago and rebased its dividend from next year in order to invest in the business. The shares surged as much as 9.3%.

To contact the reporter on this story: Deirdre Hipwell in London at dhipwell@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Marthe Fourcade

©2020 Bloomberg L.P.

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