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Primark feels effects of Brexit as profit margins dip

But fashion retailer notes good performance of Spanish market, its second largest after Britain

A Primark store in Valladolid.
A Primark store in Valladolid.

Primark, the low-cost fashion retailer, is feeling the effects of the Brexit vote but notes that sales in Spain remain brisk.

For the 53 weeks ending on September 17, Primark reported revenue of £5.9 billion (€6.6 billion), up 11% from the previous year (or 9% at constant currency).

The company said it hoped not to raise prices despite the drop of the pound

Adjusted operating profit climbed to £689 million (€775 million), a 2% rise from a year earlier (or 1% at constant currency), although the margin dropped to 11.6% from 12.6%, it said in its 2016 annual results report.

The company said it hoped not to raise prices despite the drop of the pound due to the Brexit vote, which has had a negative impact because Primark sources most of its clothing from low-wage Asian countries but pays in US dollars.

The cheap fashion brand, which is a unit of Associated British Foods (ABF), noted the good performance of the Spanish market compared with Britain, where sales remained stationary, and Germany and The Netherlands, where they fell.

Primark is celebrating 10 years in Spain, which is its second largest market after Britain. There are 41 stores here, one more than a year earlier after the opening of its flagship store on Madrid’s Gran Vía in October 2015.

English version by Susana Urra.

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