Primark Sees Profit Up 26% In Last Six Months

Discount fashion chain Primark has seen its half-yearly operating profit rise 26% to £298m.

Owner Associated British Foods (ABF) said its retail arm saw the surge in profit in the 24 weeks to March 1.

Revenue in the period for Primark was up 14%, to £2.278bn.

While like-for-like sales growth was 4%, its aggressive expansion plans with larger new stores helped drive the increase in revenue.

ABF shares were trading more than 8% up on Wednesday morning.

The chain saw double-digit growth in Spain and Portugal, along with "very strong" growth in northern Europe.

It now has 269 stores with a total selling space of 9.6 million square-feet and expects store expansion to increase by a third more than that achieved last year.

Its operating margin increased by 13.1%, brought about by improved warehouse and distribution efficiencies and lower freight rates.

ABF revealed more details about compensation for workers in Bangladesh, following the collapse of an eight-storey factory in capital Dhaka, which claimed the lives of 1,100 people a year ago.

Primark has paid compensation over the collapsed Rana Plaza in Dhaka

It said $2m (£1.18m) has been paid in short-term aid to the families of all the workers employed at Rana Plaza, most of whom it claims were making clothes for its competitors.

ABF has further agreed to pay $1m (£595,000) to the Rana Plaza Donors Trust Fund, chaired by the International Labour Organisation (ILO).

A further $9m (£5.34m) is being paid in long-term compensation to the affected families.

ABF said the total compensation totaled $12m, of which $7m was included in last year's results and $5m factored into this year's results.

It said: "We support the ILO in urging other retailers sourcing from Rana Plaza to donate to the trust fund so that it can pay out in full to the remaining victims."

ABF has also announced a decision to take the Primark brand to the United States.

It will open a 70,000 square-foot store in Boston, ahead of further expansion plans in the north-east of the US during 2016.

Overall the company, which also has interests in groceries, sugar, agriculture and ingredients supply, saw group revenue down 2% to £6.2bn and pre-tax profit up 4% at £468m.

ABF owns brands including Twinings tea, Kingsmill bread, Jordans, Ryvita and Silver Spoon sugar.

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