Primark and Burberry lead retail sector's fightback

Two fashion retailers at opposite ends of the price spectrum provided further evidence that the retail sector is performing better than expected yesterday, with one of the sector's less-stellar recent performers even rejecting a takeover approach.

Strong performances by Primark and Burberry, as well as the fashion group Alexon turning down a bid, suggest that the painful slowdown in the global retail sector may be abating.

The value fashion giant Primark, which is owned by Associated British Foods (ABF), posted first-half profits up by 10 per cent to £122m, although it warned that the depreciation of the pound would "compress" its margins in the second half.

The luxury fashion label Burberry said that store-based like-for-like sales, which account for 60 per cent of its business, grew by 3 per cent in the three months to 31 March, compared to a fall of 3 per cent in the previous quarter. Burberry said adjusted full-year pre-tax profits would be around the middle of market expectations.

The trading updates came as the fashion group Alexon – which operates the Ann Harvey and Bay Trading retail chains – revealed that it had rejected an unsolicited approach from an unnamed third party. It said no price or terms were indicated.

Primark, which has 187 stores in the UK, Ireland, Spain and the Netherlands, said sales powered ahead by 18 per cent to more than £1bn in the 24 weeks to 28 February, driven by new space and like-for-like sales up by 5 per cent.

John Bason, ABF's finance director, said: "With the high street down by 5 to 7 per cent, for us to be up by 5 per cent is a fantastic result."