Associated British Foods hailed the “outstanding” performance of its Primark retail chain today after group profits rose by 12% to £590m.
The figure for the year to 17 September was in line with expectations and followed sales of £1bn and a profits jump of 30% for Primark.
At the company’s grocery business, which features the brands Twinings, Ovaltine and Ryvita, sales were up by 7% to £2.61bn with profits ahead by 18% to £188m.
The company said its prospects remained bright with investment worth £1.5bn set to pay off over the next two years.
This has included the acquisition of stores from the Littlewoods and Allders chains, meaning Primark will be trading from 4m sq ft in early 2007 compared with the 2.3m sq ft seen a year ago.
Out of the 120 Littlewoods stores acquired by AB Foods, 41 are due to be refurbished into Primark sites with the remaining 79 sold.
AB Foods believed that recognition of the brand in the press had helped cement “this remarkable business in the consciousness of clothes shoppers”.
The group operates 122 Primark outlets in UK and Ireland but suffered a blow last week when fire destroyed the division’s main warehouse in Leicestershire.
AB Foods said alternative arrangements maintained the supply of stock to UK stores, although it warned “some limited disruption” was anticipated.
Elsewhere in the business, AB Foods said it experienced sharp increases in energy and related costs while competition remained robust.
The bakery operations in the UK and Australia both had difficult years, although the company said the relaunch of premium brand Kingsmill Gold and improvements to its supply chain gave it confidence for the future.
The company’s hot beverage brands achieved strong sales and profits growth, helped by significant brand marketing and new products, including Twinings Everyday tea aimed at the mainstream part of the market.
Ovaltine remained popular in its three key Asian markets of China, Thailand and the Philippines while sales of crispbread brand Ryvita benefited from the desire of consumers to seek new and healthier snack foods.
References: EGi News 08/11/05
