Primark makes its mark again but ABF still bittersweet tale

Comment Martin Flanagan

Will you take sugar with that? No thank you, it doesn’t agree with me. Associated British Foods (ABF) gave the City another sense of deja-vu yesterday as its low-end, high-stepping fashion retail chain Primark has yet again pulled the company out of a jam while its sugar business disappoints.

ABF said that Primark had a record Christmas as part of sales lifting 7 per cent in the 16 weeks to 6 January.

However, the sugar business saw torrid trading because of lower prices across the European Union, with revenues falling 12 per cent, stripping out outcurrency fluctuations.

Giving some damage limitation, ABF warned in November that high sugar volumes and lower costs would only partially mitigate the impact of much lower EU prices in 2017-18. Prices have been dented by substantially higher EU sugar production.

No such fetters on Primark. It remains ABF’S linchpin division, Primark’s lowentry price points a constant thorn in the side of more high-end operators such as Next, Marks & Spencer and the clothing offerings of the department store groups.

Primark has outperformed its peers in the UK over the crucial festive period. That is impressive, particularly for a business that has no exposure to the primary thrust of growth in the retail sector, online sales.

If clothing retailers are suffering as consumers rein in purchases as earnings growth trails inflation, nobody has told Primark about it.

It has become the cheap clothing retailer of choice for the UK public, with just enough of a fashionable veneer not to cause customers embarrassment.