Primark UK sales growth slows amid weather hit

THE owner of budget fashion chain Primark has seen UK sales growth more than halve as it became the latest retailer to reveal a weather hit.

Associated British Foods said Primark’s UK like-for-like sales rose 3% in the six months to March 3, down sharply on the 10% growth in the previous year.

It said trading was affected by an unusually warm October and the Beast from the East in the final week of its first half.

Overall like-for-like sales at Primark fell 1.5% in the half-year as the impact was felt more acutely elsewhere in Europe, in particular northern Europe.

Underlying operating profits rose 4% at Primark to £341m on a constant currency basis, despite the sales woes and a knock to its profit margins from the weak pound.

But AB Foods said the UK performance at Primark was “remarkable” amid difficult conditions and said profit growth would ramp up in the second half.

Chief executive George Weston – whose family own the majority of AB Foods shares – said: “Our UK performance was remarkable in the circumstances and delivered a strong increase in our share of the total clothing market.

“Looking ahead, we expect this profit growth to accelerate with the continuation of our retail selling space expansion and an improvement in margin following the recent strengthening of sterling against the US dollar.”

Primark saw group sales fall significantly in October, while it added the final week was “challenging” due to the freezing temperatures across northern Europe.

It said sales were 1% higher in the 15 weeks to February 24, which it said was “encouraging”.

The group opened another seven Primark stores in the first half, including at Charlton and Staines in the UK.

Across the wider group – which also owns Twinings tea and Kingsmill bread – underlying half-year pre-tax profits lifted 1% to £628m as an earnings drop at its sugar arm weighed on results.

Bottom-line pre-tax profits slumped 30% to £603m after figures from a year earlier were boosted by a £255m gain from the sale of its US herbs and spices business and south China cane sugar operations.

Grocery underlying earnings rose 9% to £159m at constant exchange rates in the first half.

But its sugar business was left nursing a 24% plunge in underlying operating profits to £90m due to lower prices across the EU.

Shares rose more than 3% on AB Foods’ upbeat profit outlook for the second half, while the group also said it remained on track to see “progress” in underlying earnings.