Thursday, December 29, 2011

Primark's sales boosted by £12 dresses and £10 shoes

A Primark printed square shoulder top is £6 Photograph: Barry Mccall
Primark today reported no let-up in demand for its "cheap chic" as sales (Primark sale off, sale off at primark) continue to grow at home and abroad.
Its £12 floral dresses and court shoes for a tenner pulled in shoppers, with analysts estimating like-for-like sales increased 7% in the 16 weeks to 19 June. That is just shy of the 8% figure reported for the first six months and better than high street rivals: on Wednesday Marks & Spencer said its like-for-like clothing and homewares sale off had risen 6% in the 13 weeks to 3 July.
John Bason, finance director at Primark's parent group Associated British Foods, said Primark's success would be a major contributor to "very good progress" in profits for ABF's financial year, which ends in September. He said margins were expected to be higher than last year as increased sales volumes offset higher freight charges and the effect of adverse currency movements on supply costs. He was more cautious about the next financial year, adding: "Wider consumer sentiment might start to weigh into next year."
Bason said Primark's move into Spain was going well. The low-price fashion market Рwhich began in earnest in the UK a decade ago Рwas now gaining momentum on the continent, he said. "The value clothing market in Spain is far smaller than it is here." Primark recently opened a shop in Barcelona and plans another two branches, in Castellón and Elche, before the summer's end.
ABF, which is controlled by the family of chief executive George Weston, also benefited from a recovery at its sugar and grocery divisions following a major investment programme and a pick-up in demand. Sales of its brands – which include Silver Spoon sugar, Mazola vegetable oil and Ovaltine – were up 14% in the 40 weeks to 19 June.
In the UK, Allied Bakeries traded strongly with Kingsmill bread doing well despite a "hugely competitive" retail environment as supermarkets cut prices of household brands to seduce shoppers. As a result, the company said, sales of branded products such as Kingsmill had increased at the expense of the division that bakes own-brand goods for retailers such as Tesco and Sainsbury's.
Investec analyst Martin Deboo, who has pencilled in pre-tax profits of £805m this year, described it as a "decent" performance: "It looks to be the usual swings and roundabouts. However the swings are swinging and the roundabouts are rotating in more or less the same directions as we were expecting."
ABF shares closed up 14.5p at 995p.
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