May 8, 2009
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Primark sizes up H&M heartland with first German store

May 8, 2009

FRANKFURT, May 8 (Reuters) - British discount fashion retailer Primark is squaring up to Hennes & Mauritz (HMb.ST) as it muscles into the Swedish fashion giant's biggest market with its first store opening in Germany in two weeks time.

Matthew Williamson for H&M

Primark's store in the northern German town of Bremen -- due to open on May 22 -- could be the first of many, a company source told Reuters.

"Frankfurt is one of the next on the list, we've already identified a couple of possible sites there," the source said. "The idea is to open a few, see if it works in Germany and then take it from there."

Primark, owned by Associated British Foods (ABF.L), has shaken up the fashion market in Britain and Ireland by selling fashionable clothes at rock bottom prices. It plans to open its first store in Portugal by September and opened its first Dutch store in Rotterdam last year.

It posted a 10 percent rise in half-year operating profits with like-for-like sales up 5 percent as shoppers were attracted to the stores in the economic slowdown.

Analysts believe that eventually Primark could open 100 stores in Germany, where the country's 60 billion euro ($80.45 billion) fashion market is dominated by C&A and H&M.

Germany is H&M's biggest market and this year is facing its most severe recession since World War Two, with the government forecasting a 6 percent contraction in the economy.

H&M, the world's third-biggest clothing retailer by sales after Gap Inc (GPS.N) and Zara owner Inditex (ITX.MC), reported a 3 percent fall in sales at established stores in March. (Reporting by Eva Kuehnen; Editing by David Cowell)

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