AB Foods suffers flat revenues as Primark like-for-likes disappoint

9th Jul 2015 07:07

Revenues were flat at Primark owner Associated British Foods in the 40 weeks to 20 June, but up 2% against the same period last year if currency moves are ignored.An 8% increase in stores selling space helped sales at Primark rise 9%, or 13% at constant currency rates, although like-for-like sales were flat despite a positive UK LFL performance.The 'fast fashion' retail chain, which is on track to open its first store in the USA in Boston's Downtown Crossings in September, was held back by new stores openings in the Netherlands and Germany eating into sales at existing stores in the region.As well as the UK, there were also "very strong" performances from Spain, Portugal and Ireland, while stores in France, which are excluded from the LFL measure, also traded very strongly.In retail, the group has opened 0.6m sq ft of space in the year to date, and reiterated its guidance for 0.9m sq ft of net openings in the full year.The weakening of the euro against sterling hit Primark's sales, while the strengthening of the US dollar and sterling have affected all parts of the group such that ABF expects a full year forex impact of £25m if current rates persist."Our earnings expectation for this financial year is unchanged and reflects a modest decline in adjusted earnings per share for the group for the full year," the company said.In its grocery arm, performance was said to be "on track", with the recovery in profitability at the ingredients division continuing and the agri businesses maintaining the strong momentum of last year.Analyst Darren Shirely at Shore Capital said he did not anticipate changing his financial estimates post today's update. He has forecast pre-tax profit of £999m, earnings per share of 95.5p that would represent a fall of roughly 8% on the previous year."We expect ABF's stock to trade flat post today's update, but see scope for outperformance over the forthcoming couple of months as market/ analyst excitement around the US debut feeds into the share price," he added.