Primark eyes 10 US stores by 2016

Value fashion retailer Primark said today that it has signed a lease for a store in the centre of Boston – its first outlet in the US – and it has plans to be trading from ten stores in North America by the end of 2016.

A lease for 70,000 sq ft of selling space at Downtown Crossing in the heart of the Massachusetts city has been signed and Primark expects the store to open in late 2015 before further US shops are added to its portfolio over the following 12 months.

In a trading update prior to entering the close period for its full-year results to 13 September 2014, which are scheduled to be announced on 4 November, Primark’s parent company Associated British Foods said that negotiations are under way to secure further stores in the north-east of the US, which will be supported by leased warehousing in the region.

Neil Saunders, managing director of retail research organisation Conlumino, said that such ambition to grow in the US is critical if Primark is to make its volume-based business model work outside of Europe.

"Sticking to large cities, where visibility and passing footfall is guaranteed, is the correct entry strategy," he explained.

"Once established Primark should not preclude looking at out-of-town retail as a method of reaching more of the US, especially if it wishes to grow outside of the populous East Coast. However, all this is for the future: in a country as vast as the United States, the approach of initially penetrating a small corner of it is eminently sensible."

Saunders suggested that the US market for quality fast fashion sold at very low prices is not as developed as it is in the UK, giving Primark an opportunity to catch the attention of the North American shopper and make inroads into this new market.

"Becoming an established part of ‘Main Street’ will not be without its challenges but ultimately we believe that the Primark concept will do well and the US expansion will open up yet another avenue of growth for the already rapidly growing firm," he added.

Today’s pre-close statement indicates that the Primark business is progressing well in its existing markets, with sales for the full year expected to be 17% ahead of last year at constant currency and 16% ahead at actual exchange rates.

Associated British Foods said that the positive trading results for the year were driven by an increase in retail selling space, expected like-for-like sales growth of 4.5%, and superior sales densities in its newly opened stores.

"Good like-for-like sales growth was driven by highly successful autumn/winter and spring/summer ranges," it said.

"Sales over the Christmas period were excellent and were boosted in the third quarter by warm weather, especially in the spring and early summer, which led to good trading across the group and outstanding results in Spain. Early sales of the new autumn/winter range are encouraging."