Primark owner says it expects the firm to benefit from Brexit Sterling fall

Primark owner Associated British Foods said it should ultimately benefit from Brexit as it predicted rising profits despite a squeeze on its budget fashion chain from the plunging pound.
The door from Primark into The Bridges was closed off to Sunderland shoppers today, with visitors still able to reach the shop from High Street West.The door from Primark into The Bridges was closed off to Sunderland shoppers today, with visitors still able to reach the shop from High Street West.
The door from Primark into The Bridges was closed off to Sunderland shoppers today, with visitors still able to reach the shop from High Street West.

AB Foods saw shares jump six per cent higher as it posted a five per cent rise in underlying pre-tax profits to £1.07 billion for the year to September 17 and said it expected another hike in earnings for the coming year.

The group confirmed like-for-like sales at its Primark business dropped two per cent in a “challenging” year and repeated warnings that the fall in the value of the pound since the Brexit vote would knock margins at the retailer over the coming year.

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AB Foods has already pledged not to raise Primark price tags, even though it is in line for a hit from the pound’s fall this financial year, as it buys a lot of its clothes from Asia in US dollars.

But chief executive George Weston said the pound’s fall brings “benefits and challenges” to the group.

It is hoping for a boost to the value of overseas group earnings, which account for around half of the group’s total, while the new financial year results will also be driven higher by a strong performance from its sugar business.

A spokesman said: “Changes in legislation and trade agreements, particularly in the areas of trade tariffs and UK agricultural policy, have the potential to benefit the group, and the current level of sterling offers UK food producers significant opportunities to replace imported food and build export markets.”

The firm, which also owns Twinings tea and Kingsmill bread, saw underlying earnings at Primark edge one per cent higher with currency movements stripped out to £689 million.

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