Shore Capital says 'hold' ABF despite US store deal for Primark

20th Oct 2014 15:08

Shore Capital is keeping its 'hold' recommendation on Primark owner Associated British Foods (ABF) despite a deal with US department store group Sears to open Primark shops in the US.ABF has entered into leases with Sears to open seven stand-alone Primark shops across the north-east US, with the first to open in late 2015 or early 2016 near Philadelphia and the second to launch in New York.Sears will continue to have a significant retained presence in six of the locations where Primark is leasing space.Shore Capital said ABF's strong cash generation and balance sheet would enable it to fully fund what the broker described as Primark's considerable growth potential.But it added: "With challenges evident across some areas of the group, notably sugar, sustained and broadly-based growth has been hard to come by. We retain our 'hold' stance despite today's positive news."Shares in ABF rose 55p or 2.1% to 2624p at 14:49 in London.