Primark owner's shares dive despite record sales
Investors ditched shares in Primark owner Associated British Foods yesterday despite a solid first-quarter trading update that showed its clothing chain had a "record" Christmas week as Brexit-squeezed UK consumers flocked to its stores.
Sales at Dublin-headquartered Primark jumped 9pc in the 16 weeks to January 7, and were up 7pc when favourable exchange rate movements were stripped out.
The increase was spurred by increased selling space.
Barclays estimated that like-for-like Primark sales in the UK were 4pc higher in the period.
"The UK is on fire," said ABF chief financial officer John Bason.
"Of the 20 largest retailers, our market-share growth has been the strongest over the last year." Primark is not the only discounter that's thriving amid the UK's general retail gloom.
As shoppers grapple with higher food prices prompted by the pound's drop in the wake of the vote to leave the European Union, they've turned to the likes of Steinhoff International's Poundland, B&M European Value Retail ,and German grocers Lidl and Aldi for bargains.
Poundland reported a 5.6pc increase in same-store UK sales, its most successful Christmas ever, while B&M's UK same-store sales rose 3.9pc. Lidl's UK sales in December were up 16pc, while Aldi's were 15pc higher.
ABF said the performance by Primark, which trades as Penneys in Ireland, had seen it grab a higher market share in the UK.
It said that unseasonably warm weather during October held back sales in the rest of Europe.
"This was followed by good trading in the five weeks leading up to Christmas," it added, confirming that the chain had record sales in the week before Christmas. ABF shares have been weighed down in recent weeks amid concerns over its Primark operations in the United States, however.
The group said yesterday that trading there "has continued to make progress".
ABF has also warned that profits at its sugar business will fall more than expected this year due to a price decline.
"A revenue and profit reduction greater than previously forecast is now expected for the full year primarily as a result of significantly lower EU sugar prices, which adversely affected our UK and Spanish businesses," it said.
Shares in ABF fell as much as 4.1pc during the day and were 3.6pc lower near the market close in London. (Additional reporting Bloomberg)