British retail and food concern Associated British Foods (ABF) had a rise in profits over the past six months of no less than twenty percent to 496 million pound (over 580 million euro), exceeding analysts' predictions. Clothing chain Primark was a big contributor to the good results of its parent company.
55% rise in profit and 7% comparable sales growth
Primark succeeded in boosting operational profits of the first half of the financial year by 55% to 238 million pound (almost 280 million euro). The chain once again has overcome the rising price of cotton and the economic crisis, two factors that normally stunt profit growth significantly.
Sales of Primark stores that have been operation for over a year, grew 7% in the first six months of the financial year, while sales margin rose from 2.4% to 11.9%, predominantly because of lower cotton prices and a weaker dollar.
Since the start of this year cotton prices are on the rise though and the enduring cold weather in the first months of 2013 also sent some shivers down the spine of Primark, but apparently nothing too bad.
Groceries division also positive
The great performances of Primark and the rise of profits of 29% in the groceries division of AFB succeeded in compensating the drop of profit by 5% in the sugar department.
Company sales rose by 10% to 6.33 billion pound (over 7 billion euro). Associated British Foods is expecting a positive evolution for the entire financial year of 2012-2013. After announcing the good results, the share of AFB skyrocketed.
Primark wants to conquer Paris
France is one of the factors that have to ensure a good second half of the year: Primark wants to get a foothold in Paris. “We will open a couple, not in flagship locations, and we will learn. We will learn about reception, difference in mix, trading hours etc, and then we will take it from there”, said CEO of ABF George Weston.
At the moment Primark has locations in Ireland, the United Kingdom, Germany, Austria, Portugal, Spain, Belgium and the Netherlands. The Irish chain was founded in 1969 and currently has 257 locations.