Primark eyes faster profit growth rate
Primark continued to resist the pressures of the economic downturn yesterday as it revealed robust sales and predicted healthier profit growth in the months ahead.
The chain, which is owned by Associated British Foods, saw like-for-like sales in the six months to March 3 increase 2%, with total revenues up 15% at £1.6bn.
Primark, which has 233 stores in the UK and across Europe, will enjoy a faster rate of profit growth in the months ahead due to new stores and lower cotton prices, AB Foods said.
AB Foods - the owner of a sugar business and household brands including Kingsmill bread, Twinings and Ovaltine - reported a 3% rise in adjusted pre-tax profits to £363m as revenues increased 11% to £5.8bn.
The grocery arm saw revenues increase 4% to £1.8bn, while operating profits declined 30% to £75m, driven by restructuring costs at its Australian business George Weston Foods.
Kingsmill maker Allied Bakeries saw its margins squeezed in the first half as it rolled out promotions to draw in cash-strapped consumers.
AB Foods said it "refreshed" the Kingsmill brand in January with a new package design and TV ad campaign, featuring its 50/50 bread and Little Big Loaf Tasty Wholemeal.
Primark saw slow trading at the start of the financial year as a result of the unusually warm autumn, but sales picked up over the Christmas period and have continued into the new year.
The chain saw its profit margins squeezed in the first half as it absorbed higher costs and decided not to pass them on to consumers.
The group opened 10 new stores in the first half, including three in Spain, three in Germany, one each in Portugal and the Netherlands, and two in the UK.