Primark sales surge continues

Associated British Foods has forecast better than expected second-half results after a strong performance from its low-cost fashion retailer, Primark, which trades in Ireland as Penneys.

Annual sales at Primark, which has bucked the woes of the high street, are expected to be 22 per cent ahead of last year, the group said in a trading update ahead of its full-year results covering the period to September 14th.

Primark’s like-for-like sales growth was expected to be close to 5 per cent partly because of an “exceptional” start to the year that was boosted by the autumn weather in 2012.

Growth was subdued in the second half during bitter spring weather, when the UK had its coldest March in 50 years. But summer trading was strong and there had been a good performance in the group’s northern continental European stores. Stronger markets included Spain, where like-for-like growth had improved. Lower cotton prices and markdowns meant Primark’s operating profit margin in the first half was higher than a year earlier.

Overall, AB Foods said there would be “good progress” in adjusted earnings per share for the full year. Elsewhere in its sprawling operations, it said poor 2012 growing conditions meant British Sugar produced less sugar – 1.14 million tonnes compared with last year’s 1.32 million tonnes.

Its agriculture businesses had continued a strong first-half performance, however, and “will deliver full-year revenues and profit substantially ahead of last year”.

Grocery revenues also continued to improve in the second half and will show year-on-year improvement for the full year.

"Adjusted operating profit is expected to show a substantial improvement over last year with the benefit of the non-recurrence of restructuring costs in George Weston Foods in Australia and Allied Bakeries," ABF said. – (Copyright The Financial Times Limited 2013)