The group’s adjusted operating profit for the second half will be ahead of expectations delivered by a strong finish to the year from Primark. As expected, net interest expense in the second half will be well below last year’s charge and the underlying tax rate for the year will be slightly lower than that used in the interim results, and last year, reflecting the further reduction in the UK corporation tax rate. Adjusted earnings per share for the full year will show good progress.
Sales at Primark for the full year are now expected to be 22% ahead of last year at actual exchange rates, which benefited from the recent strengthening of the euro, and will be 21% ahead at constant currency.
This excellent result was driven by an increase in retail selling space, like-for-like sales growth which we expect to be close to 5% for the full year, and the superior sales densities in the larger new stores. Like-for-like sales growth in the first half was flattered by an exceptional start to the year with the benefit of seasonal autumnal weather in 2012 compared with an unseasonably warm autumn in 2011.
In the second half, although growth was subdued during the very cold months of March and April, trading during the summer months was strong and built upon the success of the same period last year. Trading in our stores in northern continental Europe has been strong throughout the year and like-for-like growth in Spain, initially held back by the large number of new store openings, has improved.
Operating profit margin in the first half was higher than last year reflecting the benefit of lower cotton prices and lower markdowns. The strong trading over the summer also resulted in lower markdowns and the second half margin will now be in line with the first half, beating our expectations.
During this financial year we will have opened 16 new stores, including West Bromwich which is scheduled to open on 12 September, closed the smaller of our two stores in Lincoln and extended the stores in Manchester, Newcastle, Chester and Mary Street, Dublin.
This added 0.8m sq ft of selling space and will bring the total to 257 stores and 9.0 million sq ft at the financial year end. We expect to add more than a million square feet of selling space in the new financial year with an extensive programme of openings in time for Christmas 2013. Our first store in France, in Marseille, will open in December.
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