Primark owner says sales are up

Sales at Primark are doing well despite tough retail conditions

Associated British Foods, the owner of Primark, says strong growth in sales at the fashion chain will offset falling sugar profits and rising debt costs.

In a trading update, the company said sales at Primark are expected to be up by 2% on a like-for-like basis for the second half of its financial year.

The firm, that also owns the brands, Ryvita, Kingsmill, and Ovaltine, saw growth in profits in its grocery arm.

However sugar profits will be lower due to EU reforms and depressed prices.

The EU has changed its rules regarding sugar subsidies and quotas for sugar production allocated to EU states, and a record sugar crop in China has kept prices down.

ABF markets sugar dervied from EU beetroot production under the Silver Spoon brand.

AB Foods' finance director John Bason said that although the UK retail environment was tough, prospects were better for a value retailer like Primark as the discount sector continued to gain market share in the UK clothing retail market.

He said, "We have the right merchandise, good ranges and stock levels are good. Trading is very brisk."

The opening of eight new Primark stores is expected to be completed in the second half of this year - five in Spain and three in the UK.