Business World

Sunday 25 August 2019

'Unseasonably warm weather' impacts on Primark sales

Like-for-like sales at Primark – the trading name for Penneys outside of Ireland – declined by 1.5pc during the period
Like-for-like sales at Primark – the trading name for Penneys outside of Ireland – declined by 1.5pc during the period
Ellie Donnelly

Ellie Donnelly

Like-for-like sales at Primark – the trading name for Penneys outside of Ireland – declined by 1.5pc in the six months to 3 March, with sales impacted by "unseasonable warm" weather in October, the group said.

Despite the decline in sales, operating profit in the retail division of Associated British Foods (ABF), which owns Penneys and Primark, increased by 6pc to £341m during the period, as Primark's following on social media grew strongly.

"Our website and these social media channels are increasingly relevant to our customers, building awareness of our band and product, and are drawing them into our stores," ABF said.

However bottom line pre tax profits at the group fell by 30pc to £603m (€699m) in the six month period.

ABF said that the statuary operating profit last year included the benefit of a profit on the sale of businesses, which it said explains the 30pc reduction in statuary profit, and a reduction in basic earnings per share of 24pc to 60.9 pence.

Adjusted operating profit at the group was down 1pc year-on-year to £648m in the six month period.

Meanwhile overall sales at the group increased by 2pc to £7.4bn in the six month period.

The increase in sales was driven by "good" sales and profit growth across all the company's business at constant currency, except the group’s sugar business, where ABF said the reduction was "as expected."

The group’s grocery division performed well, with pre tax earnings increasing by 5pc year-on-year to £159m during the six month period.

The grocery division performance was driven by sales under the Twinnings Ovaltine brand.

"The group made progress in this period. Good sales and profit growth was achieved by all of our businesses at constant currency, other than sugar, where the reduction was as expected," George Weston, chief executive of ABF, said.

Sugar earnings before interest and tax decreased by 27pc year-on-year to £90m as a result of significantly lower European Union prices.

Looking forwards and the group said that its financial year 2018 outlook remains unchanged, with "progress" expected in both adjusted operating profit and adjusted earnings per share.

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