Primark sales extend strong run
10:59 10 July 2014
Primark’s sales growth has continued to accelerate after the retail chain benefited from warm weather and a busy period of store openings.
Associated British Foods, which also owns household brands such as Kingsmill, Twinings and Ovaltine, said Primark’s total revenues growth was 22% in the quarter to June 21 at constant exchange rates.
This brought the improvement in the first 40 weeks of its financial year to 17% and reflected the impact of warmer weather compared with a year ago in March and April and continued strong trading over the following two months.
Selling space increased by one million sq.ft on a year earlier to take the Primark estate to 275 stores covering 10 million sq ft in locations across Europe.
A further nine new stores have been opened since the end of the period, including a new outlet in Canterbury and a relocation in Cardiff.
Across the group, quarterly revenues were 3% higher at constant exchange rates but 3% lower when currency movements are included.
It said sterling was stronger than most of its major trading currencies in the first half of the financial year, adding that if current rates prevail it will suffer a £50 million impact compared with last year’s earnings.
However, shares opened higher today as the company said strong levels of profitability in retail, grocery and ingredients meant it was now on course to grow earnings per share in the current financial year.
In grocery, revenues were 5% lower compared with last year at constant exchange rates, with the majority of the decline caused by lost contracts and lower UK sugar pricing at Silver Spoon.
This was offset by market share growth for Kingsmill in the face of challenging trading conditions, while Twinings Ovaltine continued its recent record of profit and sales momentum.
Sugar revenues in the last 16 weeks were 20% lower than last year at constant currency, driven by substantially lower sugar prices, weaker EU sales volumes and lower sugar production in North China.
The decline reflects the end of EU sugar quotas in 2017, although the speed of adjustment has been faster than the company expected.
The UK sugar campaign in 2013/14 benefited from the mild winter as the company produced 1.32 million tonnes of sugar compared with 1.15 million tonnes the previous year, with beet yield per hectare 12% ahead. Record operating performances were achieved at all plants, the company added.