Record sales at Primark in the week before Christmas

Jenna Warner
January 19, 2018

The retailer's operating margins in the first half of AB Foods' financial 2018 are expected to be close to those reached at the same period a year ago, with purchasing control offsetting the adverse effect of a weaker pound, said AB Goods.

Primark owner Associated British Foods (ABF) achieved "record" retail sales in the week before Christmas with strong growth in the United Kingdom, but shares in the firm have fallen on a weaker than expected outlook for its sugar division.

Sales at Primark were up 9pc year-on-year in constant currency, according to a trading update from ABP.

This reflected a "strong" like-for-like sales performance in the United Kingdom and continued store expansion. It also saw record sales in the week before Christmas.

The firm said group revenue was four per cent up on the previous year at constant currency rates.

Operating margins in the first half are expected to be broadly unchanged from past year as tightly managed stock offset the impact of a weaker sterling against the dollar. The company expects to open 1.2 million sq. this financial year.

Shares have been under pressure in recent weeks as some analysts have questioned the outlook for sales growth in Primark's existing stores estate amid current tough trading conditions. Its agriculture business enjoyed a 13 per cent rise at constant currency. It forecast an improvement in grocery margin for the full year. The Twinings and Ovaltine brands were both said to have achieved good sales growth.

The company's effective tax rate for financial 2018 is expected to fall by 100 basis points, following the recent US tax reforms.

"And after a bumper Christmas, proving Primark can maintain sales to offset weakness elsewhere will be a key challenge when it publishes Q2 results in late February".

Volumes at Allied Bakeries remained strong and some progress had been made in reducing the loss for this financial year, said ABF.

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