Primark’s 16% sales surge gives up-market rivals food for thought

Cash-strapped shoppers have continued to prove a godsend for discount clothing chain Primark, putting its owner, Associated British Foods, on track for “substantial growth” in underlying profits.

Strong demand for its budget ranges and overseas expansion helped drive a 16 per cent jump in Primark’s sales, figures yesterday revealed.

The retailer, which opened its 238th store earlier this week, in Berlin, described trading in the UK as “good” across the 16 weeks to 23 June, despite a weaker performance during a weather-hit April.

Its upbeat trading statement contrasts with Tuesday’s news from Marks & Spencer that it had suffered a 6.8 per cent drop in clothing and general merchandise sales – its worst showing in three years.

Investec Securities analyst Martin Deboo described Primark’s performance as “impressive” but shares in parent AB Foods were largely flat due to the impact of strong competition on its Kingsmill bread business.

The grocery division, which also owns Twinings tea, saw its margins come under pressure as shoppers sought out aggressive promotions.

However, Silver Spoon sugar was supported by strong home-baking trends related to the Queen’s diamond jubilee celebrations, while Jordans and Ryvita were helped by advertising campaigns.

Retail analyst Nick Bubb said: “In the case of Primark, there are plenty of discount fast-fashion chains around, but what makes them different is the high quality of their store merchandising and design.”