Primark progress as still in fashion for UK shoppers

The owner of Primark expects profits to keep rising as it continues to open more stores.

Associated British Foods said it opened 16 new outlets for the discount fashion chain in the UK, Europe and the US last year.

It predicts total sales for Primark will jump 11% in the six months to 4 March.

There were no signs UK consumers were reducing their spending, AB Foods said.

Finance director John Bason said: "The consumer in the UK has got more disposable income this year than they had a year ago - fact."

AB Foods said Primark in the UK was performing well and expected like-for-like sales to be up 2% for the six-month period, but be flat for the business as a whole.

The chain will open new stores in London, Belgium, Spain and the US over the next three months.

However, the company warned the weak pound could squeeze margins at Primark, which accounts for about half its profits.

Sterling has fallen 16% against the US dollar since the EU referendum last June and 10% against the euro, making imports to the UK more expensive.

Kate Ormrod, senior analyst at GlobalData said Primark's keen pricing gave it some protection, but added: "Ensuring product ranges remain fashionable and relevant will be imperative to retain appeal.

"This is particularly important as emerging players such as boohoo.com and Missguided continue to encroach on Primark's fast fashion USP, enabling them to steal customers and share."

AB Foods, which also owns brands including Twining tea and Kingsmill bread, said it expects "excellent progress" in group profits and its outlook for the full year was unchanged.

In November, chief executive George Weston said the pound's fall would bring "benefits and challenges" to the group.

ABF said Twinings and Ovaltine revenues were well ahead of last year, with Twinings winning market share in the US, Australia and France as well as the UK.

Ovaltine sales posted good growth in the developing markets of Vietnam and Brazil.

Higher sugar prices and increased production in Africa helped boost revenue at AB's sugar business.

Shares in AB Foods were flat at £26.09 in afternoon trading in London but have fallen more than a fifth over the past 12 months.