Associated British Foods raises outlook amid strong sales at Primark
Primark owner Associated British Foods has upped its full-year outlook after being boosted by strong sales at the low-cost fashion chain and the Brexit-hit pound.
AB Foods said revenues rose 13% on a constant currency basis and 20% at actual exchange rates in the third quarter, driven by increased profitability at Primark.
The cut-price retailer shrugged off tough high street trading hitting some rivals as it benefited from strong Easter trading and warm weather, with its UK turnover up 9% in the year to date.
Primark sales are 13% ahead in the year so far at constant currency, and 21% at actual exchange rates.
Shares in FTSE 100-listed AB Foods, which also has a sugar and grocery business, rose as much as 6% as the group said the bumper third quarter had "marginally improved" its outlook for the full-year.
It added: "The results to date reflect a material translation benefit from the devaluation of sterling following the result of the UK referendum on EU membership in June last year.
"The underlying operating performance of the group during the third quarter was ahead of our forecast as a result of a stronger profit delivery from Primark which has marginally improved our group outlook for the full year, " it added.
The group said the fillip from the pound would be "significantly less" in its fourth quarter.
AB Foods - which also generates revenue in Asia, Europe and the Americas and also owns Twinings tea, Kingsmill bread and Silver Spoon - has benefited from sterling's collapse following last year's referendum vote.
But it also noted a fall in profit margin caused by higher import costs as a downside of the pound's weakness.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: " Currency headwinds may be hitting margins, but Primark's disposable fashion at amazing prices remains popular with shoppers across Europe, with sales growth many high street retailers would kill for."