Primark bucks high-street trend with 14% rise in sales

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The cut-price fashion giant Primark looks to have trounced Marks & Spencer's recent performance on clothing, as its parent company Associated British Foods posted a 19 per cent rise in group sales yesterday.

The ABF finance director John Bason said: "Primark sales are well up and that has been driven by an increase in floor space and on like-for-likes in a weak consumer environment and also very poor weather in April."

Total sales at Primark grew by 14 per cent over the 16 weeks to 21 June. While its like-for-like sales growth has slowed – it is thought to have delivered flat same-store sales for the 16 weeks to 21 June – City analysts said this performance was well ahead of M&S's recent numbers.

Charlie Mills, an analyst at Credit Suisse, said: "It looks like the third quarter was broadly flat, or just the right side of flat, for Primark." M&S's sales of general merchandise, including clothing, were down by 6.2 per cent for the 13 weeks to 28 June, although commentators noted that the company sells clothes at a much broader range of prices.

Mr Bason said Primark's sales had not been affected by the BBC's Panorama programme last month, which revealed that some of its suppliers in India were using child labour. Primark has terminated the contracts of the suppliers involved. "I think our trade has continued against this particular background," Mr Bason said. "Since Panorama, I have not noticed any difference in trade."

He added that Primark planned to pilot its first stores in Holland and Germany early next year, and was also expecting to open branches in Portugal.

Associated British Foods, whose portfolio includes Allied Bakeries and the brands Twinings, Patak's and Ovaltine, posted a 24 per cent rise in group sales for the 16 weeks to 21 June.

However, Mr Bason said: "Trade is tough and there is no doubt that there is a slowdown with the UK consumer, but against that background the business is trading well."

ABF's grocery revenues were strongly ahead of last year, primarily driven by price rises across the business, as it recouped increasing raw materials costs, and improved sales.

Mr Bason singled out brands such as Twinings and Ovaltine, which were continuing to deliver strong growth. "They are both flying," he said.

In particular, he said, Ovaltine was registering strong growth in developing countries such as Thailand, where parents give it to children in the morning as an energy-boosting drink, as opposed to its traditional consumption in Britain, where it is viewed as a pre-bedtime drink.

Shares in AB Foods fell by 29.5p to close at 738.5p.