LONDON, Sept 10 (Reuters) - Primark-owner Associated British Foods is set for a jump in annual earnings as shoppers snapped up bargains at its discount fashion chain and shrugged off the effects of wet weather and depressed economic growth in western Europe.
The retailing and food group says it expects annual earnings will be “substantially” ahead as Primark’s formula of cheap chic defies the economic gloom in its key markets of Britain, Ireland and Spain, while it also gained from strong sugar sales.
Primark’s 242 stores, which sell chinos for 10 pounds and cable jumpers for 12 pounds, expect annual sales to rise 15 percent, while stripping out new store openings like-for-like sales are expected to rise 3 percent for the full year, ahead of the first half’s 2 percent rise.
“Trading this summer in the UK was particularly strong and sales in continental Europe remained buoyant,” the group said of Primark in an end of financial year trading statement.
This comes as many European retailers, such as Marks & Spencer, are struggling as consumers’ incomes are being squeezed by rising prices, muted wage growth and austerity measure from western European governments.
ABF, which also sells Silver Spoon sugar and Twinings tea, said profits at its sugar business for the full year will be considerably higher than last year due to the benefit of rises in European and African revenues.
The London-based group was giving a trading update on Monday towards the close of its financial year covering the 52 weeks to September 15. The company, which is 55 percent owned by Chief Executive George Weston and his family, is due to report full-year results on Nov. 6
The shares closed on Friday at 1,306 pence.