Primark to focus growth drive on US and Poland
Discount clothing retailer Primark is set to pin a large element of its future growth on expansion into new markets, such as Poland and the wider Eastern Europe region, and "disciplined" store roll-outs in Spain and the US.
"Management believes Primark has the potential to double its sales over the long run...Eastern Europe holds "great potential" with high brand association in the region," according to Davy analysts after a briefing from John Bason, finance director with Primark's parent Associated British Foods.
Primark - which trades in Ireland as Penneys - has already opened in Slovenia and Slovakia and plans to expand into Poland and the Czech Republic.
Last week Primark reported a 4.5% year-on-year rise in sales for the 16 weeks up to January 4, saying the strong performance was largely driven by growth in the eurozone.
Davy said Primark is bullish on the US and expects to turn a profit there this year, following a minor loss in 2019. It will grow its store numbers there from nine to 13 by next year.
"Primark's ambition in the US is clear," said Davy, "The group has the capacity to triple its current sales from its existing operating footprint."
Last year Primark relocated its sourcing, buying and merchandising functions from the UK to Dublin in a bid to support its international expansion efforts.
The company is unlikely to add to its 37 Irish stores, but does intend to refurbish a small number of them.
However, Brewin Dolphin analyst Nicla Di Palma said she doubted the US would prove to be a game-changer for Primark and that - given the level of competition in the American value clothing sector - it would unlikely become a major player in the country.
