(Corrects agriculture sales gain in final paragraph.)
Associated British Foods Plc (ABF) revenue rose 8 percent in the third quarter as sales at its Primark clothing outlets offset declines at the sugar business.
Primark revenue rose 20 percent in the 16 weeks to June 22, the London-based maker of Twinings tea said today in a statement. Sales at the sugar division fell 15 percent in the same period due to “different phasing of U.K. volumes and the timing of shipments of Zambian exports to the EU.”
“The group remains on track to make good progress in adjusted earnings per share for the full year in line with expectation,” it said.
The company is stepping up expansion at Primark, which sells denim shorts for 7 euros ($9.2), in Europe to tap demand for inexpensive clothing. Primark, which does not have an online store, began in June to sell some of its products through Asos Plc (ASC), the U.K.’s largest online-only fashion retailer and plans to open its first shop in France.
“Primark’s growth remains particularly impressive with a significant acceleration in growth evident in the last few months,” Graham Jones, an analyst at Panmure Gordon, wrote in a note today, who rates the shares buy.
In the first nine months of the year, Primark sales were up 22 percent driven by an increase in retail selling space in the period coming up to Christmas and “good” same-store sales. The company was among retailers whose products were made in the Bangladeshi factory building that collapsed in April, killing more than 1,100 people. Primark has made plans for long-term compensation of the victims, it said.
AB Foods fell 0.3 percent to 1,815 pence yesterday in London, crimping the stock’s gain this year to 19 percent.
Third-quarter sales at AB Foods’ ingredients unit increased 5 percent, and revenue at the agriculture division rose 18 percent. Sugar revenue was up 1 percent in the first nine months and sugar sales and profit remain on track for the full year, the company said. Excluding the impact of currency fluctuations, revenue rose 9 percent in the first nine months of the year.
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