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Primark Sees Sales Growth Continue, AB Food's Sugar And Grocery Sales Stabilise

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PRIMARK SALES GROWTH
Primark's latest results showed positive sales increase, boosted by Christmas sales of onesies and jumpers | Getty Images

Christmas onesies and fluffy jumpers helped Primark continue its meteoric rise, after the retailer's parent company revealed its sales were expected to rise by a whopping 23% for the six months to 2 March.

Unlike much of the British high street, Primark has steadily gone from strength to strength. The UK economy and economies across Europe have been persistently weak, putting pressure on consumers' purses, but Primark's focus on cheap clothing has proved to be popular among cash-strapped consumers.

It increased its selling space by 13% over the last year, giving it 257 stores across Europe and almost nine million square feet of selling space.

The surge in sales reflected a good trading period over Christmas, when jumpers and onesies sold well. Figures also looked good as the autumn in 2011 was a lot warmer, which impacted negatively on that year's sales, plus cotton was lower in price in 2012, boosting AB Food's margins.

Company Watch's business analyst Nick Hood: "The outstanding success of Primark continues, with astonishing like-for-like sales growth, almost certainly because of tough economic conditions rather than despite them. Better still, profit margins have improved as pressure on input costs has reduced, generating strong cash flow and allowing the chain's owners, AB Foods to cut debt and further strengthen an already robust financial profile."

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, agreed, adding it wasn't just strong sales that made Primark a high street success; its strong cash flow and lower net debt for the period underpinned its performance.

But not everyone was as confident; Investec noticed the like-for-like sales growth had slowed slightly in the past quarter, prompting its analyst Martin Deboo to suggest that share prices might dip a little on Monday morning.

Elsewhere in AB Foods, the sugar and grocery businesses stabilised somewhat compared to the sharp decline AB Foods saw in 2012, but a decline in China and higher sugar costs impacted on performance.

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