Primark owner AB Foods says no-deal Brexit is ‘reckless’

Penneys owner maintains full-year guidance as revenue rises ahead of internal forecasts

Primark’s total sales in the UK rose 1 per cent – exceeding internal expectations in a market which declined year on year. Photograph: iStock

Primark’s total sales in the UK rose 1 per cent – exceeding internal expectations in a market which declined year on year. Photograph: iStock

 

Leaving the European Union at the end of March without a deal would be “reckless” for Britain, the finance chief of Primark owner Associated British Foods said on Thursday.

Other business leaders in Britain have warned of catastrophic job losses and chaos at ports if the country does not agree on terms for its withdrawal from the European Union, now little over two months away.

As well as owning the Primark fashion chain, AB Foods is one of Britain’s biggest food producers with brands such as Ovaltine, Ryvita, Twinings and Jordans. It also owns major sugar, agriculture and ingredients businesses and generated revenue of £15.6 billion in 2018-2019.

“If anybody believes that you can just go ahead without some sort of an agreement here, I think that that is reckless,” finance director John Bason said. “The UK’s food supply generally is dependent on the free-flowing border.”

AB Foods maintained its full-year earnings guidance on Thursday, reporting revenue growth for the 16 weeks to January 5th in all of its businesses apart from sugar, sending its shares up to 6.7 per cent higher. The shares have fallen about 25 per cent over the past year.

Primark sales

Total sales at Primark, which accounts for about half of the group’s revenue and profit and which trades in Ireland as Penneys, increased 4 per cent at constant currency, though like-for-like sales saw “a modest decline”. Operating margin increased.

Primark’s total sales in the UK rose 1 per cent – exceeding internal expectations in a market which declined year on year. Trading was described as strong in France, Belgium, Italy and the United States but soft “in a difficult German market”, Mr Bason said

Primark had continued to trade positively in the UK in the early weeks of January.

“AB Foods’ crown jewel is still Primark, and it’s managing to shine through a pretty muddy high-street environment,” said Hargreaves Lansdown analyst Sophie Lund-Yates.

ABF said overall revenue from continuing operations for the 16 weeks was 2 per cent ahead of the same period last year at constant currency. It said it still expected adjusted operating profit and adjusted earnings per share for its 2018-2019 financial year to be in line with the £1.4 billion and 134.9 pence per share made in 2017-2018. – Reuters