Buoyant Primark hands out a lesson to rivals

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Primark put rival Marks & Spencer in the shade yesterday as demand for its budget ranges and overseas expansion drove a 16 per cent sales boost.

The discount chain, which opened its 238th store in Berlin yesterday, described trading in the UK as “good” across the 16 weeks to June 23, despite a weaker performance during a weather-hit April.

Its latest upbeat comments contrast with those of M&S this week after a 6.8 per cent drop in clothing and general merchandise sales – its worst showing in three years.

Investec Securities analyst Martin Deboo described Primark’s performance as “impressive” but shares in owner Associated British Foods were flat due to the impact of strong competition on its Kingsmill bread business.

The grocery division saw its margins come under pressure as shoppers sought out aggressive promotions.

But Silver Spoon sugar was supported by strong home baking trends over the Queen’s Diamond Jubilee and Jordans and Ryvita were helped by advertising campaigns. Ovaltine saw strong growth in emerging markets.

Its sugar business lifted revenues by 54 per cent as it benefited from higher prices and rising volumes.

Primark’s performance was boosted by the opening of four new stores in recession-hit Spain over the period and analysts believe its estate could grow to 250 by Christmas as it continues to expand overseas.

The statement showed the chain’s margins are being boosted by falling cotton prices. Mr Deboo added: “We see this as a highly commendable performance in the light of the wet April and June and negative like-for-like sales in the wider apparel space.”

The group confirmed it is on-track to deliver “substantial growth” in underlying profits in its full year to September.