Primark fashions a big rise but issues warning

Primark yesterday reported an "outstanding" performance for the past year, with operating profits up 35 per cent, but its owner warned that future margins will be squeezed by the soaring costs of cotton and transport.

Associated British Foods said sales at the fashion retailer were up 18 per cent to 2.7 billion in the year to 18 September, while operating profits hit 341 million, helped by 13 new stores, including its first in Belgium.

Primark will continue to open stores, particularly in Spain where growth has been strong.

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The solid performance helped its parent company to increase sales by 10 per cent to 10.2bn while adjusted profit before tax increased 26 per cent to 825m.

AB Foods makes Kingsmill bread, which grew market share with the launch of the Little Big Loaf a year ago, but warned that margins are set to be squeezed by the rising cost of wheat.