Primark can't avoid Brexit

Sun glasses at Primark store  in Birmingham
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Back to Primark, owned by Associated British Foods which issued a trading update earlier. ABF's shares are down 1.8%.

Sophie Lund-Yates, equity enalyst at Hargreaves Lansdown, says: “Primark is managing to dodge many of the issues troubling the high street, in a climate where tough conditions are forcing many competitors to close stores, Primark’s sales growth is actually being driven by new shop openings.

"That’s not to say the retailer is home and dry though, like-for-like sales are actually in decline. Added to that, Brexit related headwinds means costs are expected to increase next year, and margins are expected to dip.

"The group also needs to strike a fine balance between keeping sales moving and opening too many new stores - over the next financial year, one million square feet of new space is to be added to the store estate.

"Opening new shops is certainly a tactic that has worked for ABF, and continues to offset the decline in like-for-like performance. However, the thing to remember is it can’t follow this method forever.”

Primark-owner on Brexit

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More from Associated British Foods, mentioned earlier.

It says two thirds of its operating profits are earned outside the UK and the weakening of sterling against our trading currencies, particularly towards the end of the financial year, will result in a translation gain this year of£10m.

With regards to Primark it says: "The strengthening of the US dollar during this year and the recent weakening of sterling will increase the cost of goods for next year."

But, it adds that it businesses "have completed all practical preparations should the UK no longer be a member of the EU and contingency plans are in place should some of our businesses experience disruption at the time of exit."

Primark sales fall 2%

shoppers with primark bags

There's a trading update from Associated British Foods.

It says sales at its retail arm Primark for the full year are expected to be 4% ahead of last year ( at constant currency and actual exchange rates), with increased selling space partially offset by a 2% decline in like-for-like sales.

"Our full year outlook for the group is unchanged, with adjusted earnings per share expected to be in line with last year. Strong profit performances this year from Primark and grocery are expected to be offset by the anticipated decline in AB Sugar."

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