Primark has continued to deliver strong sales, the value fashion powerhouse’s parent Associated British Foods revealed in its pre-close statement ahead of November’s interims.
Associated British Foods brushed aside the Met Office’s failure to make good on its barbecue summer promise, attributing anticipated full-year like-for-like growth of 7% at Primark to “better weather than last year, appealing merchandise and a strong position in the UK”.
Primark’s European operations were also performing well, ABF reported, but it said it remains very early days for the German and Portuguese markets, which the fashion chain entered this year.
Primark’s operating profit margin will be lower than last year owing to the increased fixed overhead represented by a new distribution centre and lower gross margins as a result of the effect of sterling weakness on the cost of goods priced in US dollars.
Despite Primark’s strong performance, Charles Stanley analyst Jeremy Batstone-Carr stuck to his reduce stance on Associated British Foods because he said that “better value lies elsewhere”.