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Westons to Bring Primark to U.S.

British fashion retailer signs lease for former Filene's location in Boston.

LONDON — The Weston family is preparing for its mass fashion encore in the U.S.

On Wednesday, Associated British Foods plc, the publicly quoted company owned by the Weston family, revealed plans to take Primark to the U.S. market.

The first Primark store will open in Boston toward the end of 2015 on the site of a former Filene’s department store, with 70,000 square feet of selling space.

The store will be in the historic Burnham Building, which is currently being renovated, at Downtown Crossing. Primark also plans to open warehouse facilities to supply future stores.

“After extensive research, it has been decided to take the concept to consumers in the USA,” ABF said in a statement that came out simultaneously with its 2014 interim results update.

Primark follows Joe Fresh into the U.S. market. Fresh is owned by Canada’s Loblaw supermarket chain, which is controlled by the Weston family, whose vast retail portfolio also includes stores such as Selfridges, Holt Renfrew, Brown Thomas and Fortnum & Mason.

Joe Fresh has been aggressively opening freestanding stores in the U.S., and began opening shops-in-shop in J.C. Penney units last year. The brand is now looking to expand into overseas markets.

During a call with financial analysts to discuss his company’s interim results, George Weston, ABF’s chief executive officer, said “a handful” of Primark stores were planned for the American northeast, and that Boston “feels like a good city” to plant the first flag. He pointed to the city’s young and vibrant population, its abundance of colleges and universities and its public transportation system, as well as its “cultural connections” with Europe.

Although Weston declined to put a price tag on the future openings, during the call one analyst proffered an estimate 100 million to 200 million pounds, or $168 million to $326 million at current exchange, in up-front costs, including new stores, warehousing and shop fits.

An industry observer said the U.S. rollout would be similar to those in Europe: “ABF opens a small number of stores at first, they look and they learn and then they go forward.”

Primark is a mass-market fashion retailer beloved of bargain-hunters across Europe and its Oxford Street flagship in London has become a tourist destination. It has more than 250 stores in eight countries across Europe: Paris will have three Primark units by the end of the year and major new locations are set for Cologne, Cardiff and Berlin. The company said Wednesday it also plans to increase its warehousing space in Spain and Germany to keep up with demand at its stores there.

The retailer is also present in cities such as Rotterdam, the Netherlands; Innsbruck, Austria; Lisbon, and Madrid, and has concessions at Selfridges stores in London, Birmingham and Manchester, England. The stores stock baby and children’s wear, women’s and men’s wear, homeware, accessories and beauty products. Prices range from children’s T-shirts at 1.50 pounds, or $2.52, and a gilet with fake fur trim at 9 pounds, or $15.12, to a tasseled shoulder bag for 12 pounds, or $20.16, and a men’s two-button tweed jacket for 35 pounds, or $58.80. Primark opened its first store in Dublin in 1969 under the name Penneys, and Penneys remains its trading name in the Republic of Ireland only.

Freddie George, retail analyst at Cantor Fitzgerald Europe Research in London, said the U.S. is a natural market for Primark to enter, and that its mass-market pricing could undercut many of its local competitors. “It’s clear they are serious about the U.S. market and want to succeed, which is why they want to test it out first,” he said.

“Primark’s combination of fast fashion, decent quality and bargain-basement prices in a department store format will be unique and successful in the U.S. market,” said Craig Johnson, president of Customer Growth Partners. “In the U.K., Primark is a phenomenon, and even though its expansion in continental Europe is still in its first few years, we’ve been tracking its progress and its uptake has been very strong. Primark is like a Wal-Mart for apparel only, but with a fashion sensibility much nearer to H&M, with fast fashion, basics, shoes and accessories, both market and owned brands, housed in a midtier department store — and with a bit better quality than H&M or Forever 21. By our calculations, Primark is running at over $800 a square foot, exceptionally high annual productivity for a department store.”

In the U.S., retailers are seen stepping up store closings. Primark is seen as a likely taker for vacated sites, particularly those from Sears and J.C. Penney. Johnson said typical Primark stores are 70,000 to 80,000 square feet, with the Oxford Street flagship in London much larger.

Stephen Springham, senior retail analyst at Planet Retail, a consulting firm that’s part of the WGSN Group, said Primark expects to open more than a million square feet of new space this year, accelerating growth. “Following recent store openings in France, Primark’s European footprint now covers seven countries — France, Spain, Germany, the Netherlands, Belgium, Austria [and] Portugal. But unlike most of its peers, Primark has not taken the low-risk franchise option. All its international stores are company-owned, the business effectively backing itself and putting its money where its mouth is. Higher risk, but higher reward.”

Cushman & Wakefield, which represented Millennium Partners in its long-term retail lease with Primark at the Millennium Tower/Burnham Building, said Primark will lease a total of 112,000 square feet on four floors in the eight-story building of which 70,000 square feet will be selling space.

The U.S., because of its size, diverse population and shopping habits that differ from those in Europe, has a reputation as a graveyard for U.K. businesses looking to expand there. The most recent failure was Tesco’s Fresh & Easy supermarket chain, which pulled out of the U.S. last year following a severe contraction in 2012-13 profits.

George said he did not see any connection whatsoever between Tesco’s announcement last week that it plans to open seven stores for its F&F mass-market clothing line — also on the east coast of the U.S. — later this year, through a franchise partnership with Retail Group of America.