Sunshine smiles on Primark as sales surge 8pc
Budget fashion chain Primark showed a "marked improvement" in sales today as the warmer weather helped it underline its high street dominance.
Like-for-like growth was subdued by the cold weather in March and April but did much better in May and June, parent company Associated British Foods said.
Shares rose 6pc today as the company said total sales were up by 20pc in the 16 weeks to June 22, giving a figure of 22pc for the first 40 weeks of the financial year due to an increase in selling space as well as sales growth.
The company did not publish figures on a like-for-like basis but analysts suggested a slowdown to 3pc in the 16 week period after a 7pc rise in the previous half year.
Panmure Gordon analyst Graham Jones said this rate would still leave Primark "comfortably ahead of key peers", while it had an impressive store opening programme lined up. He upgraded the shares to a "buy" rating.
The company said: "In the third quarter, like-for-like growth was subdued during the very cold months of March and April but we have seen a marked improvement with the better weather in May and June."
Primark, which has 257 stores with nine million square feet of selling space, said extensions to its Manchester and Newcastle stores completed on schedule. Store openings are expected to accelerate in the next financial year and include an outlet in Marseille, the chain's first venture in France.
The company said it was "deeply saddened" by the collapse of the Rana Plaza building in Bangladesh in April, where one of Primark's suppliers was based. The catastrophe left more than 1,000 dead.
Primark donated food to 1,300 families after the tragedy and has paid short-term compensation to more than 3,300 workers from the building. It has pledged long-term compensation for victims who worked for their supplier, and their dependents.
Parent company AB Foods said profits were higher and net debt was lower and expected to fall further. The group remained on track to make progress on earnings per share in line with expectations, it said.
Overall total revenues for the group were up 8pc in the most recent 16-week period.
Elsewhere in the business, sugar sales were down, while takings were up in the agriculture and ingredients divisions.
In grocery, which includes Twinings, Ryvita and Jordans cereals, total sales were up 7pc in the quarter.