Retailers Primark and SuperGroup have unveiled double-digit increases in turnover after benefiting from a busy period for store openings.
Primark said in a trading update yesterday that its third-quarter revenues jumped 22 per cent on a year earlier, helped by warmer weather and the addition of one million square feet of selling space.
The firm, owned by Kingsmill bread and Twinings tea parent Associated British Foods (ABF), now has 275 stores across Europe and is on track to open its first locations in the US towards the end of next year.
Echoing a similar alert from luxury goods brand Burberry, ABF warned it could suffer a £50m hit to annual profits due to the strength of the pound, but adjusted earnings per share are expected to be ahead of last year.
Analysts at ETX Capital said the strong sales at Primark, along with the growth of discount grocers Aldi and Lidl, “suggests an evolving consumer climate in which many consumers have shifted away from spending at mid-range to premium end retailers in an attempt to save money”.
Meanwhile, Superdry owner SuperGroup reported an 18.8 per cent jump in underlying pre-tax profits to £62m for the year to 26 April, with group revenues surging 19.6 per cent to £430.9m.
The retailer, which started as a market stall in 1985, now has more than 500 stores worldwide, having added 46 international franchised and licensed outlets during the year.
SuperGroup warned in May that its profit would be at the lower end of expectations because of heavy discounting by rivals, a late Easter and a lack of spring stock in the fourth quarter.
But chief executive Julian Dunkerton said: “With a strong pipeline of new stores, particularly in mainland Europe, we are well positioned for further profitable growth in the year ahead.”
The business bought back its Scandinavian distributor last month, which follows a similar deal with its German and Spanish concessions last year, giving SuperGroup greater control over its international expansion.
It plans to open between 80,000 and 100,000sq ft in the current financial year “with a shifting emphasis towards European stores and in particular the German market”.
Germany’s fashion retail market is worth €58.4 billion (£46.4bn), according to Verdict Research – some 20 per cent larger than the UK’s.
Kate Calvert, retail analyst at Investec, said: “We see material growth opportunities not only to maximise UK profitability but also driving the online business and rolling out in Europe, where it is still early days in its expansion.”