6 hours ago | By Sandra Halliday
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Sep 08, 2014
A strong finish to the year from discount fashion chain Primark has allowed parent Associated British Foods (ABS) to maintain its annual earnings guidance. The group said Monday Primark’s full-year currency neutral sales were expected to jump 17% year-on-year, and by 16% at actual exchange rates. That growth is driven by an additional 1.2m sq ft in retail selling space and an estimated 4.5% rise in same-store sales, ABF said.
However, this was below analysts’ forecast for a 5.2% comps rise, and its shares fell almost 4% in early trading.
The company said Primark operating profit margin of 13.1% in H1 was higher than last year, “reflecting the benefit of warehouse and distribution efficiencies and lower freight rates”.
ABF said these benefits had continued in H2 and, with the strong trading over the summer resulting in a low level of markdowns, the business expects the full-year margin to be slightly higher.
“Good like-for-like sales growth was driven by highly successful autumn/winter and spring/summer ranges,” ABF said in the statement.
“Sales over the Christmas period were excellent and were boosted in the third quarter by warm weather, especially in the spring and early summer, which led to good trading across the group and outstanding results in Spain. Early sales of the new autumn/winter range are encouraging.”
Primark, meanwhile, is also stepping up its overseas expansion plans, signing a lease on a 70,000 sq ft store in Boston and beginning talks on 10 other units in north-east America.
On Monday, ABF said it had secured a property at Downtown Crossing in the centre of Boston which it hoped to open in late 2015. It also hoped to have another 10 stores open in the region by late 2016.
Primark also said it closed seven smaller stores over the year – to focus on larger, better located units – giving the retailer 278 stores with a total of 10.2m sq ft of selling space by the end of the financial year.
ABF said Monday it expected adjusted earnings per share for the 2013-14 year to be ahead of the 98.9 pence made in 2012-13.
Until Monday morning, shares in ABF, 55% owned by the Weston family, had soared 59% over the last year, mainly on the back of Primark’s success.
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