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Primark margins have potential to fall further

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Reuters
Published
today Apr 21, 2009
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LONDON (Reuters) - Discount fashion retailer Primark said on Tuesday 21 April its operating margins may fall further in its second-half after sliding in its first-half due to the extras costs from a new distribution centre.


Tutu mesh bra £5.00 worn with matching thong £5.00 from the Primark Lingerie Collection for Spring 2009. (Photo: Primark/PRShots)

Primark, owned by Associated British Foods (ABF.L), reported a 10 percent rise in half-year operating profits with like-for-like sales up 5 percent in the 24-weeks to February 28, but its operating margins fell to 11.5 percent from 12.3 percent.

"Primark's operating margins fell in the first half mainly due to our new distribution centre and have potential in the second half to come off further," said AB Foods Chief Executive George Weston in an interview after results.

The 187-strong Primark chain reported profits up 10 percent to 122 million pounds on like-for-like sales up 5 percent as shoppers continued to be attracted to the discount fashion clothing chain in the economic slowdown, while it looked to open a seven further stores in its second-half.

Weston said Primark, which earns just over a third of AB Foods profits, would continue to open stores but had no plans to open outside the six countries in which it operates or plans to operate -- namely Britain, Ireland, Spain, Portugal, the Netherlands and Germany.

AB Foods reported first-half adjusted pretax profit falling 2 percent to 275 million pounds, ahead of a consensus forecast of 262 million pounds and a range of 245 to 268 million, while it held to its outlook for flat earnings per shares for its year to September 2009.

(Reporting by David Jones)

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