Q&A with Primark owner ABF's finance director John Bason

You talk about high sales densities in France as one of the drivers behind Primark’s sales growth. What is driving this?

I think the sales 15% ahead at constant currency at Primark is comforting and probably a pleasant surprise to people in the City. So I think that was seen as good sales performance.

If you look at the percentage increase in selling space, that’s more like 12%, so like-for-likes are virtually absent from this. So how do you explain the difference between the 12 and the 15%? The major driver of that is our five stores in France – one in Marseilles, three on the outskirts of Paris and one in Dijon.

If you take the selling space, if you were able to take the average sales per square foot on the rest of the Primark estate, sales would have gone up by 12%, so what that is saying is that the rate of turnover per square foot is way higher than average. The start we’ve had in France is nothing short of sensational.

What do you think is driving that?

Where Primark really comes through is the value for money; it’s the fashionability and the great store environments that we’ve got. It’s the bringing together of those three factors. It’s very democratic, Primark is there for everybody and it has brought people in droves, it has way beat our expectations, and clearly the performance of these five stores is better than the performance of Primark stores elsewhere.

How are the new stores in the Netherlands and Germany cannibalising older stores?

Cannibalisation is one of those things in the retail world that is difficult to deal with. Often it is associated with a very mature business where you add more stores than you should do and you see this decline in like-for-like sales across the estate.

I think Primark is different, and I think it’s a reflection of our success. We are a destination store in Holland and Germany. We saw something similar seven or eight years ago in the UK. In Germany, in particular, where public transport is really good, people are travelling 50km to 100km to go to another city or town specifically to go to Primark.

When a store opens that is closer to you, you no longer go to the more distant store. We first saw this very clearly when we bought a number of the Littlewoods stores in the UK in 2007, we opened a 90,000 sq ft store in Liverpool, and like-for-like sales in Manchester dropped, because people in Liverpool had no big Primark store near them, and were going on buses and trains to Manchester.

How much of an impact did the warm weather have?

We were affected for around the first 10 weeks of the period. Around a third of our product range was affected – coats, gloves and knitwear. The other two-thirds are fashion items and don’t really rely on the cold weather. I am always very cautious about like-for-likes over a very short period in fashion retail – you are very affected by the weather.

If the weather outside is different to the stock you’ve got inside the store, either way, you’re going to be affected and people shouldn’t shy away from that. So if you’re trying to divine a medium or longer-term trend in the success of a store you need to look at a longer trend, and I think that’s proven in the case of Primark.  

Given the issues around the weather, how promotional was this season for you?

Somewhere near normal. We are comparing this year to last year, which was incredibly successful, with abnormally low markdown levels. The expectation was that markdown levels would be higher this year. The autumn experience for those seasonal lines has proven that to be the case. I think we’re going back to the run rate of mark-downs over the last five years. So it’s not been a problem, but certainly there were more markdowns this year than last year.