* Like-for-like sales flat as 15 new stores open
* More new stores planned for Europe, United States
* Prices to stay low as suppliers become more productive
(Adds finance chief comments, shares)
By Emma Thomasson
BERLIN, Jan 12 Discount fashion store Primark,
owned by Associated British Foods, saw a rapid programme
of new store openings eat into sales at existing shops in the
Christmas period in Germany and the Netherlands.
AB Foods shares, which have underperformed the FTSE 100 in
the last month after rival Next reported poor Christmas
trading, were down 2.5 percent at 0955 GMT, compared to a 0.3
percent weaker FTSE.
"The lack of return to like-for-like growth at Primark in Q1
will disappoint, even if largely linked to Europe self
cannibalisation," said Jefferies analysts in a note.
Sales at Primark rose 12 percent in the 16 weeks to Jan. 7,
matching the pace at which average retail space increased in the
period, meaning sales like-for-like sales were effectively flat.
While AB Foods said like-for-like sales in its main market
Britain were positive - rising about 1-2 percent according to
analysts - they declined in Germany and the Netherlands.
Primark has been on a big expansion drive in continental
Europe in recent years, putting pressure on rivals such as
Sweden's Hennes & Mauritz. It now has 38 Dutch and
German stores, out of a total of 328, but does not sell online.
AB Foods finance chief John Bason said the changes to
trading patterns were not a cause for concern.
"Existing stores see a reduction of sales densities but from
really high levels. It is a normalisation of sales densities,"
he told Reuters, noting that mothers with strollers could now
access one Berlin store that had previously been too packed.
AB Foods has already opened 0.8 million square feet of the
1.3 million it plans for the financial year to September, with
Bason saying more new stores were planned this year in the
Netherlands, Spain, the United States, Belgium and Britain.
In Britain, Primark reported growing market share, despite
falling shopper numbers on high streets due to ecommerce.
Primark is active on social media but has no plans to sell its
low-price clothes online as the logistics are too expensive.
Bason said sales of women's fashion have been weaker,
echoing comments by Next Chief Executive Simon Wolfson, who
believes Britons are spending less on clothes and instead using
spare cash on holidays, eating out and events.
Primark can compensate by giving more space to children's
and menswear as well as home furnishings, Bason said.
On a group basis, the company, which also has big sugar and
grocery businesses, said its outlook for the year was unchanged,
with the weak pound after Britain's vote to leave the European
Union boosting the value of overseas sales.
AB Foods reiterated that Primark's operating profit margin
will fall during the year as it has pledged to keep prices low
despite the weaker pound, which pushes up the cost of goods
sourced in Asia in U.S. dollars.
AB Foods said foreign exchange hedging contracts were in
place for most remaining purchases for the financial year, with
Bason adding that Primark was having good negotiations with its
suppliers, where productivity was increasing.
(Reporting by Sarah Young and Emma Thomasson; editing by Costas