AB Foods hit as Primark growth slows
SHARES in Primark-owner Associated British Foods dipped yesterday despite an upbeat outlook from the firm, after it admitted sales growth at its discount fashion cash cow had slowed in recent months.
The company said it expected like-for-like sales at Primark to have grown by two per cent in the first six months of its financial year, down from three per cent last year and undershooting consensus estimates.
It said margins at the retailer would have been hit as it chose not to pass rising cotton costs on to its customers late last year, but that this should rebalance in the second half as prices have now fallen.
“Primark performed strongly and well head of the high street, we are certainly not flagging a slowdown,” said finance director John Bason.
Across all its business lines, which range from clothing to agriculture via grocery brands, AB Foods said it expects interim results to be in line with forecasts, with each of its segments delivering growth.
It credited a strong performance in its sugar business for driving operating profit growth that it expects to come in ahead of last year. Though it said revenues will rise in its grocery division, restructuring costs at business in Australia and the US mean that profits will be “substantially lower”.
Shares in the company dipped below 1,190p in early trading before recovering slightly to close 1.56 per cent down at 1,200p.