Primark Gross Margin Pressure Eased Partially

The April mid term results warned that the continued strength of the US dollar will weaken the profit margin of the UK's largest parity retailer Primark in the current two fiscal year and reduce the Associated British Foods PLC (ABF.L) of the group's annual earnings forecasts, updating the sales data, indicating that the Primark procurement team has taken measures for next year's orders, and will successfully neutralize a considerable part of the negative impact.

Primark announced on Wednesday that it will continue to expand its international layout and enter tenth European markets early next year, the second largest clothing market in Italy. The first local brand of the brand will open in Milan, Alice, 12 km northwest of the city of Milan in February, and plans to enter Rome and Venice in the future.

Announced last year, with the help of North American chain corporation group Sears Holdings Corp. (NASDAQ:SHLD) retail space to open up the US market, the first flagship store in the United States will open in Boston at the end of this year.

At present, the main market of the brand is Britain, Ireland, Germany, France, Belgium and other European countries. The total number of stores in the world is 287.

Associated BritishFoods PLC has maintained its annual business.

The strengthening of the US dollar led to a significant increase in the purchasing cost of Primark, which purchases most of the goods in US dollars, and a decrease of 25 million.

Although Primark's same store sales in the three quarter were still weak, it was only flat year-on-year.

The improvement is expected to stimulate Associated British Foods PLC (ABF.L) up 5.08% and 3080 pence a day.

In the first 40 weeks (three quarters), Primark sales recorded an increase of 9%, excluding the increase in the floating rate of 13%, and continued to slow down from 15% in the first half of the year, mainly because the growth rate of sales area dropped from 11% in the first half to 8%.

In the three quarter, the same store sales were unable to achieve growth due to the high base of the same period last year, as well as the drag on the performance of the old stores in the two major markets in Holland and Germany.

JohnBason, chief financial officer of AssociatedBritishFoodsPLC, pointed out that the above factors were removed from the same store sales with 2%-3% growth.

The group said that Primark's performance in Spain, Portugal, Ireland and France was very strong, and that there was a positive growth in the same store sales in the UK.