PROGRESS

Primark owner Associated British Foods (AB Foods) is poised to see profit growth at the discount fashion chain gather pace thanks to a boost from the weak dollar and a better buying performance.

The firm said yesterday that Primark would enjoy better margins in the second half of the year, with the wider group remaining on track to hit annual profit targets.

Stripping out the impact of exchange rates, Primark sales are expected to have lifted by about 7 per cent during the 24 weeks to 3 March as the business reaped the rewards of more retail selling space.

Like-for-like clothing sales are expected to drop 1 per cent over the period after takings took a hefty hit from a bout of unseasonably warm weather in October.

However, in its latest trading update, AB Foods said Primark sales would push 1 per cent higher for the 16 weeks to 3 March, bolstered by record sales in the week before Christmas and “encouraging” trading for its new spring and summer range.

0 City analysts remain positive over the prospects for the fashion business

GEORGE SALMON, ANALYST

Updating investors, the group said: “Primark is performing very well in the UK with sales 8 per cent ahead of last year and a strong increase in our share of the total clothing market.

“This was driven by a 4 per cent growth in like-for-like sales, an increase in selling space and the breadth of our consumer offering. Our business in the US continues to make progress.

“We expect an acceleration in Primark profit growth in the second half as a result of an improvement in margin over the same period last year.

“This will be driven by better buying and some benefit of the recent weakness of the US dollar on purchases which will more than offset an expected return to a more normal level of markdowns, compared to the very low level achieved last year.”

The FTSE 100 group said it is pencilling in a drop in revenue and profits at its sugar arm, as it grapples with a hit to its UK and Spanish business caused by “significantly lower”

“Trading improved in the run-up to Christmas, and it looks like the spring/summer lines are hitting the right notes.”