Primark's profits melt but eyes up US expansion

The owner of budget clothes chain Primark has blamed warm weather and currency hits for a drop in half-year profits.
Associated British Foods said the unseasonably hot weather had hit trading in the lead up to and over Christmas and that the clothing market “has been challenging particularly in the UK”. Profits at the chain, also hit by currency exchange fluctuations, fell 3% to £313million on revenues up 5% to £2.7billion.
Chief executive George Weston said Primark’s first two stores in Boston in the US had started “encouragingly” with the brand being “well received” and footfall steadily increasing. It plans to open six more US stores later this year.
ABF said group pre-tax profit, including Primark, its sugar, ingredients, grocery and agriculture business, rose 4% to £466million over the period with revenues down 2% to £6.1billion.
Revenue at its sugar business fell 9% to £843million but it did post a £6million operating profit compared to a £3million loss this time last year.
Weston said: “After several years of decline the small improvement in AB Sugar is encouraging. Low world prices and the remaining uncertainty expected from the withdrawal of EU sugar quotas in October 2017 underline the imperative to focus on low-cost production.”
Revenues at its grocery business fell 4%. It hailed demand for Twinings Ovaltine in the UK and Thailand but said low bread prices in supermarkets as they fight a consumer price war had hit its bakery division.
Weston added: “These results demonstrate underlying progress for all of our businesses.”