£878m share fall at Primark as sales drop for first time

MORe than £878m was wiped off Primark shares after it warned sales would fall for the first time in its history.

The high Street store’s owner Associated British Foods finished the day down nearly 11pc or 341p at 2815p after a series of dire updates.

On top of a fall in trade, ABF also revealed how the pension scheme had a £200m black hole, when previously it had a surplus.

The discount retailer, which has transformed low-cost shopping with affordable, fashionable designs, blamed the unseasonal weather on the weak sales. In a pre-close trading update the firm said sales from stores that had been open for a year are expected to be 2pc lower for the year.

ABF finance director John Bason explained the figures were caused by ‘warm weather in the pre-Christmas period and a very cold March and April’.

Primark, along with rival chains had leftover stock that shoppers did not want and it was forced to slash prices in order to clear the shelves.

Bason said the clothing market had shrunk but Primark had increased its share. ‘It has been a tough market but Primark has performed well,’ he said.

‘When you compare it with what happened to the market, we are happy with Primark’s performance.’

Big sellers during the year have been women’s padded bomber jackets at £16, and cold shoulder ribbed tops at £6 where the shoulders are left exposed.

Men have been snapping up skinny jeans at £10 and printed shirts at £7.

ABF, which also has an ingredients business and makes tea brand Twinings, malt drink Ovaltine and crispbread Ryvita, said that if current sterling exchange rates continue it will have both positive and negative effects.

elsewhere at the firm, it said sales and profit in its sugar business will be ahead of forecasts.

The company also announced it is selling its sugar cane business in China to local rival Nanning Sugar as the industry consolidates.

ABF is also leading the consolidation in Africa having bought South Africa’s Illovo Sugar for £245m.