Primark owner hails ‘outstanding performance’

ASSOCIATED British Foods (ABF) has predicted a strong rise in profits for the first six months of the year, driven by an “outstanding performance” at its Primark discount clothing chain.

However, shares in the firm dipped 15p to 1,815p as like-for-like sales growth at the chain, which employs more than 43,000 people across Europe, fell shy of market forecasts.

The group, which also owns Kingsmill bread and Twinings tea, said sales at Primark during the six months to 2 March are expected to be about 23 per cent ahead of the same period last year, boosted by a 13 per cent increase in selling space – giving it 257 stores across Europe.

Like-for-like sales, which strip out the effect of store openings, are predicted to be up 7 per cent on last year, when sales suffered during an unseasonably warm autumn, but analysts at broker Cannacord Genuity said the market had been looking for an increase of about 9 per cent, “so we suspect the market may be disappointed by these Primark figures”.

ABF said the pace of store openings will slow in the remainder of the financial year before picking up again in 2014.

Group finance director John Bason said: “We expect to add a further 100,000sq ft of space this year, mainly comprising the completion of the extensions of our Newcastle and Manchester stores.”

Profits at the group’s sugar business are expected to fall compared with last year, while revenues at its groceries arm are likely to be flat amid a “highly competitive bread market”.

ABF is due to publish its first-half results on 23 April.