Primark bullish as latest store opens

Sep 11 2007 By Alistair Houghton, Liverpool Daily Post

PRIMARK owner Associated British Foods (ABF) says the chain is performing strongly as ahead of the opening of its huge Liverpool store opens tomorrow.

In a trading update ABF said sales and profit at Primark will be "substantially ahead of last year" and that the company was growing well.

Meanwhile ABF, which owns brands including Kingsmill, Ryvita, and Allinson, warned of further bread price rises to recover "recent sharp increases" in the cost of flour.

Primark has grown to become one of Britain’s best-known brands thanks to its drive to sell fashion at low prices. Its Church Street store in Liverpool store will be its biggest outside London and will employ about 900 people.

ABF said ABF’s growth was achieved despite recent poor weather hitting sales.

Its statement said: "Like-for- like sales growth in the second half is expected to be 1% and our estimate of like-for-like sales growth, for the same period in stores unaffected by new openings, is 7%.

"This was achieved despite the impact, common to other clothing retailers, of poor weather over the summer months.

"Overall sales growth will be ahead of that achieved in the first half although operating profit margin will be affected both by the predicted increase in depreciation arising from the investment in stores and by a higher level of discounting."

ABF, which re-launched the Kingsmill brand in February, increased bread prices earlier this year. The company did not disclose the extent of the latest bread price rise, which it is currently negotiating with supermarkets and other key customers. The bread operation accounts for around 7% of the ABF business.

Despite the price rises, the company said profits in its grocery division were likely to be lower for the year to September 15.

As well as losses for its Allied Bakeries arm, the division has been hit by currency weakness and restructuring costs. The grocery arm also features household brands such as Twinings, Ovaltine and Silver Spoon.

AB Foods is hopeful of improved trading from Allied in the forthcoming financial year, as the Kingsmill relaunch has resulted in increased volumes and market share.

alistairhoughton@dailypost.co.uk