Another storming performance from value fashion chain Primark countered worse than expected sugar sales at Associated British Foods.
John Bason, the group finance director who has spent years fending off questions and suggestions that ABF should float off the discount fashion chain, said today: “This statement fully displays the resilience of ABF as a whole group.”
Primark saw a 14 per cent increase in sales in the 16 weeks to January 4.
The group does not break down like-for-like sales but analysts at Panmure Gordon reckon that the first eight weeks, in shops open for at least a year, were flat and the second eight — encompassing Christmas — experienced a remarkable 8 per cent rise in sales. That is considerably better than Marks & Spencer and even a touch ahead of Next.
Just as importantly, Bason said margins at Primark were higher than expected and ahead of last year’s.
Primark opened 14 new shops in the first half including its first in France, in Marseille. This opened in December and Bason said had “seen loads of people not just on the opening day but for several days after.”
It plans another seven new shops in the second half including another four in France.
Primark’s success helped to balance the disappointing performance in sugar. For once this was not the fault of the EU sugar regime but the result of sliding prices which has seen sugar fall from 20 cents a pound to 15.5 cents a pound over the past 18 months.
Bason said that the worst-hit areas were ABF’s operations in China and Africa which largely supply domestic markets. Bason said the latest fall in prices could mean the reduction in sugar profits for the year could be even greater than expected.
But analysts pointed out that Primark should make up for all of that and the company said it was standing by its previous prediction that earnings should be flat this year.
Despite this, ABF shares succumbed to profit taking having risen sharply since the start of the year. They fell 79p or almost 3% to 2617p.