Primark turns in solid show for ABF

● Group says chain is performing ‘very well’ in the UK with sales ahead by 8%

EU sugar prices. Operating profit in its grocery business is expected to be “well ahead” of last year for the 24-week period, despite UK sales at Twinings tea taking a hit from “strong competition in green teas and infusions”.

Despite suffering on home soil, Twinings is set to improve its performance across the US and Italy, while Ovaltine chalks up strong growth in Switzerland, Germany, South Asia, Nigeria and Brazil.

George Salmon, equity analyst at Hargreaves Lansdown, said: “As one might expect, most of Associated British Foods’ divisions are in some way tied to the food supply chain. However, ABF also owns the expanding Primark network, and growth here means it’s fashion rather than food driving the group.

“Like many of the other UK retailers, ABF has flagged how a warmer October impacted winter clothing sales. However, more importantly, trading improved in the runup to Christmas, and it looks like the spring/summer lines are hitting the right notes.

“While its warmer weather clothes are flying off the shelves just now, investors might wonder if they’ll continue to do so once the blizzards expected this week kick off. Longer term, we think there’s plenty to like about Primark.”