Talk about bittersweet. Associated British Foods (ABF) announced in a trading update today that it was expecting a 17% increase in sales at its Primark stores on last year, at constant currencies. It also anticipates a 4.5% boost in like-for-like sales and a rise in profits.
ABF said Primark’s success was built on strongly performing fashion ranges, the unusually warm summer and an expansion in its number of stores, from 257 to 278. The chain is also looking to enter the US market, with a store due to open in Boston late in 2015.
That may sound pretty palatable, but there’s always a bad ‘un in any bag of sweets. In ABF’s case, it’s AB Sugar. The company blamed "unsustainably low" sugar prices and falling sales in north China (south China is fine, apparently) for "substantially lower" profit and revenue in its sugar division.
ABF said Primark’s strength will offset AB Sugar’s weakness. Another way of looking at it, of course, is that AB Sugar’s difficulties, together with an estimated £50m cost converting profits back into super-strong sterling, will effectively cancel out Primark’s success.
You’d think that would be enough to have ABF executives reaching for the Ovaltine (the comforting hot beverage is performing well in Brazil and Southeast Asia, incidentally), but they’re still looking at the positives. Earnings per share, the company said, will be higher than the 98.9p level of 2012-13. ABF’s full year results will be announced on November 4th.