Could Primark, the discount retailer, take over the world, or at least Europe?
With the current Euro debt crisis and the squeeze on people's wages, Primark's cut price fashion would probably go down very well. Analysts at Collins Stewart have identified 143 cities across 12 countries which they believe could be attractive to the company:
Many European countries have highly fragmented clothing markets and the value clothing competition from multiples is less developed than in the UK; we see the opportunity for Primark to take several points of market share within each country, as it has already done in Spain.
Opening European stores at the historic pace of 6-9 per annum suggests at least twenty years of space growth is still to come, even as UK expansion slows.
The uncertain UK environment has caused the analysts to cut their earnings per share estimates for 2011 for Primark's parent, Associated British Foods. But they reckon the slowdown will be temporary and have put a 542p a share valuation on Primark. For ABF as a whole they have a £13 target, compared to its market price of £10.85, up 5p.
