Sugar boost sweetens the pill of slashed prices at Primark

MARGINS at Primark have been hit more than expected as the discount retailer slashed prices during the summer to lure cash-strapped customers, its parent company Associated British Foods (ABF) said in a trading update yesterday.

But ABF’s sugar business, the second-largest in the world, made strong gains in China and Spain in the first half and the firm’s management said it expected the division’s profits for the full year would be “well ahead of last year and better than expected”. Brokers at Charles Stanley said that the good performance from sugar helped offset some of the weaker results elsewhere.

Overall, sales at Primark continued to grow and were expected to be up 13 per cent for the year, including new stores, the firm said. Its latest store, a 46,000sq ft shop beside the London Olympics site, opens today, bringing the number of stores in the UK and Europe to 223.

The group said operating profits over the second half met its previous expectations despite the pressure on Primark, with underlying earnings to be close to last year due to a lower tax rate and despite there being a week less trading.