UK: ABF trading in line after mixed year for Primark
By Chris Brook-Carter | 12 September 2011
Associated British Foods has said that its operating profit for the second half will be in line with expectations, with sales at its clothing arm Primark primed for double-digit growth.
Higher levels of discounting, however, have hit margins, the UK company said in a statement today (12 September).
It also reiterated earlier warnings that net interest expense in the second half will be higher than last year as a result of the higher level of average net borrowings. And adjusted earnings for the full year are expected to be similar to last year’s very strong result which benefited from 53 weeks trading.
"Sales at Primark will again be well ahead of last year and are expected to be up 13% compared to last year when adjusted for 52 weeks' trading, driven by an increase in retail selling space and further like-for-like sales growth," the company said in a statement.
It added that it delivered a 3% like-for-like increase in the first half and expects to achieve 3% for the full year.
The company said Primark had seen some growth in the UK and Ireland, despite weaker consumer demand in the second half, whilst continental Europe was "strongly ahead".
The trading statement said: "At the time of our interim results, we expected operating margins to be lower in the second half reflecting higher input prices and the full effect of the absorption of the UK VAT increase.
"There has been a higher level of discounting than is normal towards the end of the summer season on the UK high street and operating margin is expected to be a little lower than forecast as a result."
The company added that the recent softening of cotton prices is expected to be reflected in lower input costs in calendar year 2012.
Sectors: Apparel, Finance, Retail
Companies: Primark, Associated British Foods
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