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| Primark owner buoyed by stronger euro | |
| (34 minutes later) | |
| Primark’s owner is expecting a boost from the rising value of the euro against the pound in the wake of the Brexit vote. | Primark’s owner is expecting a boost from the rising value of the euro against the pound in the wake of the Brexit vote. |
| Associated British Foods had previously warned that it expected a “marginal decline” in earnings per share for the financial year, which ends in August. | Associated British Foods had previously warned that it expected a “marginal decline” in earnings per share for the financial year, which ends in August. |
| However, following the result of the EU referendum, the company said overseas profits in the final quarter would be better than expected once translated into sterling. | However, following the result of the EU referendum, the company said overseas profits in the final quarter would be better than expected once translated into sterling. |
| The better-than-expected news on profits came as Primark revealed its third consecutive quarter of sales falls at established stores, for the three months to 18 June. | The better-than-expected news on profits came as Primark revealed its third consecutive quarter of sales falls at established stores, for the three months to 18 June. |
| ABF said total sales at its fashion chain had risen by 7% in the 40 weeks to 18 June after it opened 11 new stores in the last three months of the period. However, underlying sales in the last quarter were hit by “unpredictable weather patterns”, particularly the cold weather in April followed by a return to more seasonal weather in May. | ABF said total sales at its fashion chain had risen by 7% in the 40 weeks to 18 June after it opened 11 new stores in the last three months of the period. However, underlying sales in the last quarter were hit by “unpredictable weather patterns”, particularly the cold weather in April followed by a return to more seasonal weather in May. |
| John Bason, ABF’s finance director, said the retailer’s sales performance had been affected across Europe by the weather, although it had enjoyed strong growth in Ireland amid an economic recovery in its home market. | John Bason, ABF’s finance director, said the retailer’s sales performance had been affected across Europe by the weather, although it had enjoyed strong growth in Ireland amid an economic recovery in its home market. |
| The company also warned that Primark’s UK profit margins would suffer as a result of the falling value of the pound against the dollar and the euro. However, this will be offset by a favourable boost to margins at the group’s sugar business and also in translating profits earned outside the UK, which last year made up 50% of the total. | The company also warned that Primark’s UK profit margins would suffer as a result of the falling value of the pound against the dollar and the euro. However, this will be offset by a favourable boost to margins at the group’s sugar business and also in translating profits earned outside the UK, which last year made up 50% of the total. |
| Bason said it was too early to tell if there would be a post-Brexit sales dip in the UK, but he added: “I’ve seen Primark do well in good economic times and more challenged economic times.” | Bason said it was too early to tell if there would be a post-Brexit sales dip in the UK, but he added: “I’ve seen Primark do well in good economic times and more challenged economic times.” |
| He said there would be cost pressures on all clothing retailers next year in the light of the devaluation of the pound, but that it was not clear if this would feed through into price rises for shoppers. | He said there would be cost pressures on all clothing retailers next year in the light of the devaluation of the pound, but that it was not clear if this would feed through into price rises for shoppers. |
| Bason said Primark’s prices would be partly driven by the actions of its competitors. “We are never going to be a leader on price increases,” he said. | Bason said Primark’s prices would be partly driven by the actions of its competitors. “We are never going to be a leader on price increases,” he said. |
| Plans to expand Primark remain unchanged in the light of the UK’s vote to leave the EU. The chain expects to open 300,000 sq ft more trading space by August, including two more stores in the US, at Willow Grove in gGreater Philadelphia, and Freehold Raceway in New Jersey. It will also double the size of its Creteil store in Paris. | Plans to expand Primark remain unchanged in the light of the UK’s vote to leave the EU. The chain expects to open 300,000 sq ft more trading space by August, including two more stores in the US, at Willow Grove in gGreater Philadelphia, and Freehold Raceway in New Jersey. It will also double the size of its Creteil store in Paris. |
| The company said the decision to leave the EU had created uncertainty in the business environment and financial markets, but added: “We have a strong balance sheet and we remain optimistic for the group’s continued growth.” | The company said the decision to leave the EU had created uncertainty in the business environment and financial markets, but added: “We have a strong balance sheet and we remain optimistic for the group’s continued growth.” |