Primark owner Associated British Foods said its second half profits will show a substantial rise resulting in a very strong rise in annual earnings, but it saw a slight slowdown in sales growth at its fashion discount retailer.
Its 204-strong chain Primark, which trades as Penneys in Ireland, showed like-for-like sales growth of 6 per cent for its full year to mid-September, compared to 8 per cent at the half year stage, and some 7 per cent growth estimated by analysts during its third quarter.
A slow-down in such sales is seen as an indicator that people have become more willing to spend on higher cost brands.
"Trading for the group since the half year has been strong resulting in a substantial increase in adjusted operating profit for the second half compared to last year... As previously indicated, earnings for the full year will show very good progress," the group said in a trading statement today.
The company cautioned that high cotton prices and freight costs and the increases in VAT, implemented in Spain in July and planned for the UK in January, will put pressure on profit margins next year.
The company, which also markets Silver Spoon sugar, Mazola vegetable oil, Ovaltine drinks and Twining teas, showed a continued recovery at its sugar and grocery businesses after heavy investment and a steady pick-up in demand.
The London-based food and retail group, 55 per cent owned by the family of chief executive George Weston, will report results for its full year to September 18th on November 9th.
AB Foods shares close at £10.88 sterling on Friday valuing the group at about £8.6 billion.
Reuters