Primark owner sees no sign of Brexit spending slowdown
- Author: Zachary Reyes Feb 27, 2017,
Feb 27, 2017, 16:15
It said Primark's United Kingdom operations performed well with "like-for-like sales 2% ahead of a year ago and market share increased reflecting the strength of our consumer offering".
The owner of fashion chain Primark said it had seen no sign of United Kingdom consumers reining in spending as it pencilled in a 2% rise in like-for-like sales.
Finance director John Bason said: "The consumer in the United Kingdom has got more disposable income this year than they had a year ago - fact". Primark's like-for-like sales across the group were flat.
Shares in Associated British Foods (LON:ABF) rose after the update, but have since dropped back down.
"The consumer in the United Kingdom has got more disposable income this year than they had a year ago - fact", he said.
ABF said it saw a £50m benefit from the fall in the pound in the first half - since it means overseas earnings translate into higher sterling value.
Sterling has fallen 16% against the U.S. dollar since the European Union referendum last June and 10% against the euro, making imports to the United Kingdom more expensive.
The group said it is making "excellent" progress in its full year group earnings, which will be announced on April 19, and that it expects stronger cash flow in the first half of this year compared to the last.
He reiterated, however, that Primark's operating profit margin in the first half will decline, mainly reflecting the strength of the USA dollar on input costs.
First-half sales at Primark are expected to be 11 percent ahead of past year at constant currency, and 21 percent ahead at actual exchange rates.
Kate Ormrod, senior analyst at GlobalData said Primark's keen pricing gave it some protection, but added: "Ensuring product ranges remain fashionable and relevant will be imperative to retain appeal".
Shares in AB Foods, a majority of which are owned by the family of Chief Executive George Weston, have fallen 23 percent over the past year.