AB Foods hangs earnings rise on Primark's growth

Associated British Foods expects full-year profits to be higher than predicted

by Gabriella Griffith
Last Updated: 24 Oct 2013
The UK’s appetite for all things Primark has helped to push up profits for the discount clothing store’s owner Associated British Foods. The retail and food group said operating profit for the second half of the year to September would be ahead of expectations owing to Primark’s stellar performance.

The group said sales at Primarni (to give it its affectionate nickname) are expected to be 22% higher than last year, thanks in part to the clothing stores continuing expansion. The cheap clothing colossus has opened 16 stores in this financial year and doesn’t intend on stopping there.  

‘We expect to add more than a million square feet of selling space in the new financial year with an extensive programme of openings in time for Christmas 2013,’ it said in a statement.

The French will even be saying ‘bienvenue’ to Primark in December with its opening in Marseille.

The group is in need for some good news following the disaster in its Bangladeshi factory in April of this year, in which 1,129 people lost their lives.

The news from the land of £2 t-shirts comes after a raft of good news about growth in the retail sector. Tills across the UK are seemingly ringing louder than they have in a while, year-on-year retail sales rose by 1.1% in July according to the Office of National Statistics.

For AB Foods, the news was pretty rosy across most of its businesses. It said its grocery business, which included Silver Spoon sugar and Twinings tea had enjoyed improved second half revenues and it expected an improvement on operating profits.

Its sugar business was sweet - or in line with management expectations, at any rate - and it added that its agriculture business will deliver revenue and profit ahead of last year.

With the swathe of good results for the group, the company said it expected its net debt to be £0.9bn, compared with £1.1bn last year.

Primark’s bargain basement prices have seen the brand surge from strength to strength thanks to tightening purse strings. Even with the first shoots of recovery springing forth, MT doubts the nation's penchant from Primarni will abate.

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