Primark sales up but owner “cautious” about this year’s growth

Primark-owner Associated British Foods has reported a 10% rise in first-quarter sales but says January’s VAT rise and high commodity costs mean further growth this year could be limited.

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First-quarter results for the 16 weeks to 8 January saw Primark sales up 12% on last year which it attributes to its six new UK store openings and “good” like-for-like sales growth.

The group, which also markets Silver Spoon sugar, Twinings tea and Ovaltine, says its 214 Primark stores traded well despite adverse weather in December, with revenue at the clothing stores up 12%.

December trading was dented at several other high street stores as snow impacted on sales. Dixons, Halfords and Home Retail Group, which owns Argos, all reported falling sales as shoppers stayed at home rather than heading to the high street.

Associated British Foods says it will have a cautious outlook on the coming year and warns that Primark margins will be hit by high cotton prices as it plans not to pass the extra costs on to its customers.

The group’s food and drink brands saw revenue up 9% but prices are expected to rise to cover the surging costs of commodities such as wheat, corn oil and spices.

The group says in its trading update: “Although further growth is expected for the coming year, this will be moderated by the eventual impact of the adverse weather conditions on UK sugar production.”

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