ABF cheers as Primark sales surge
BUDGET fashion store Primark yesterday reported a surge in sales, boosting profits at parent firm Associated British Foods and offsetting weaknesses in other divisions.
Primark has recently embarked on a massive expansion, opening 12 stores in the year, to take advantage of consumers trading down to lower priced clothes.
The firm, which now has 191 stores, reported a seven per cent jump in like-for-like sales and a 20 per cent jump in total sales.
Revenues lifted to £2,314m in the twelve months to 12 September from £1,933m in the year before.
The group, which makes Silver Spoon sugar, Twinings tea and Ovaltine drinks, said it expects to see “good” profit and sales growth this year, although it added that the scale and speed of the economic recovery was uncertain.
Group chief executive George Weston said: “Our business will see reasonable to good growth but the UK consumer sentiment will be subdued for a while.”
ABF said pre-tax profits rose four per cent to £655m in the year, while group revenue rose 12 per cent to £9.3bn.
The group’s ill-timed foray into corn oil futures at the top of the market earlier this year dented overall profit growth, and its grocery division suffered a two-pronged hit from a rise in commodity prices and the pressures of trading in a recessionary environment. But Weston said the second half of the year was better than the first.
Weston added that there was some evidence of consumers trading down to cheaper food products, but said the group’s major grocery brands, particularly its bread brand Kingsmill, had held up well.
The group’s sugar division saw operating profits rise 24 per cent to £1,267m – driven by a strong performance in European Union and Africa, mitigating the effect of low sugar prices in China.
ABF Foods also announced plans to cut 392 staff from its Twinings tea division as it shifts jobs oversees. Twinings, which recently used national treasure Stephen Fry in its marketing campaign, said consultations had already begun with staff.