Primark sales set to boost performance at AB Foods

ABF opened 28 new Primark stores this year

A sharp rise in sales at budget fashion retailer Primark will help to boost full year profit at owner Associated British Foods (ABF).

ABF said it expected sales at Primark to be 17% ahead of last year, with like-for-like sales growth up 4.5%.

The company said its grocery division, which includes well-known food brands such as Kingsmill and Ovaltine, had also seen "good growth".

It said the strong performances would offset a drop in profit at AB Sugar.

"Earnings per share for the full year are expected to be ahead of last year," it said in a trading statement.

Earnings per share were 98.9p in the 2012 to 2013 financial year.

The firm said both revenue and profit in its sugar division would be "substantially lower" than last year due to falling sugar prices in Europe and lower sales in China.

The strong pound also hit the company, costing it an estimated £50m for the year due to translating overseas sales back into pounds.

However, it said its "excellent result" at Primark would offset this.

It credited the expansion of its stores as well as successful autumn/winter and spring/summer ranges for the rise in sales. Warm weather in the third quarter also helped boost trading across the group.

The firm opened 28 new Primark stores in the year to 13 September, bringing its total number of shops to 278.

It plans to open its first US store in Boston late next year.

The shares fell almost 4% in early trading following the trading update.

Darren Shirley, analyst at Shore Capital, blamed the share price fall on Associated British Food's high valuation.

"There's nothing sinister in the results. The fall just reflects the demanding valuation of the stock. To keep it there the firm has to keep delivering positive surprises, but today it has simply reiterated what it said in July," he added.