Associated British Foods, which owns fast fashion chain Primark, was forced to tell investors yesterday that a strong pound would likely lead to a “marginal decline” in adjusted earnings per share for the full year.
Although profitability at AB Sugar, the multinational company’s ingredients division, is substantially lower than last year, the retail division is performing well and Primark’s expansion is continuing.
Over the last year, Primark opened five French stores, which are all trading exceptionally well. Sales for the group in the last three months, including the important Christmas period, were strong and cumulative like-for-like sales have improved since the January trading update, now at level with last year. Total first half like-for-like sales growth for the group was held back by the unseasonably warm weather in the autumn across northern Europe and the impact, on existing stores, of new store openings in the Netherlands and Germany however, total sales in northern continental Europe were well ahead of last year.
In a statement, ABF said:
“We have a very strong pipeline of new stores in Europe extending over a number of years. We continue to expect the increase in selling space for the current year to be less than 1m sq ft including further stores or extensions in Germany, Belgium and the UK.”
Significant investment has been made, and is planned, to expand warehouse capacity in Europe and there has also been, what was described as, “good progress” in building the US management team in anticipation of the launch in America later this year.