THE RECESSION is showing no signs of cramping the style of discount fashion retailer Primark, which is stepping up its campaign to conquer Europe from modest headquarters in Dublin 1.
The latest expansion plans may, according to a report in Retail Week, see the chain (operating in Ireland as Penneys) more than double its size by opening up to 300 new stores in continental Europe. As of March this year, Primark had 214 stores, with another six about to open. So far, the bulk of these are in Ireland and Britain, with just 30 in other markets.
As Retail Weekpoints out, the big potential could come in the European economic powerhouse of Germany. It seems Primark's parent, ABF, has briefed London brokerage Shore Capital to this effect in the course of a meeting.
“Management talked of the potential for 150 stores across Germany, with at least that number across its other international markets [Spain, Portugal, the Netherlands and Belgium],” the broker told its clients in a note this week.
It went on: “We believe Germany offers particular potential, given the tired and under-invested nature of much of the existing retail infrastructure.”
Darren Shirley, consumer analyst with Shore, said yesterday there was no reason why Primark couldn’t double in size over the next decade or so. He said the company typically spends “a couple of hundred million” on expansion every year and should be able to maintain this level of investment.
Mr Shirley would expect most planned stores to be opened on a leasehold basis, thus allowing Primark to avoid purchasing properties outright. “I would say something in the £300 (€340) – £350 million range. There’s a strong balance sheet within ABF.”
A Primark spokeswoman was not quite so revealing. “There is good growth potential, we think, but the company has no numbers or targets for this growth – the numbers are those of the investment bank.”
