The owner of fashion retailer Primark hailed a “remarkable” UK performance as it delivered a half-year profit boost despite tough conditions for the high street.
Shares in parent company Associated British Foods (ABF) rose 3% after it saw earnings at the brand grow, despite a squeeze created by the weakness of the pound and unseasonable weather.
ABF expects profit growth to accelerate in coming months as the recovery in the pound eases the pressure on import costs.
The results came as another high street retailer, JD Sports, also bucked the wider gloom for the sector by reporting a sharp rise in annual profits.
Primark saw like-for-like sales in the UK rise by 3% in the 24 weeks to 3 March, though there was a fall of 1.5% when overseas stores were included.
The brand’s underlying profits improved by 4% to £341m.
ABF chief executive George Weston said: “Our UK performance was remarkable in the circumstances and delivered a strong increase in our share of the total clothing market.
“Looking ahead we expect this profit growth to accelerate with the continuation of our retail selling space expansion and an improvement in margin following the recent strengthening of sterling against the US dollar.”
ABF said Primark’s performance was held back by warm weather in October – a period when retailers are trying to shift coats and other winter clothing – as well as the freezing conditions in more recent weeks that has deterred shoppers from visiting the high street.
Primark has also had to contend with a squeeze on profit margins as import costs have been pushed higher by the weakness of the pound against the US dollar.
But it expects to see profit growth accelerate in the second half of next year with sterling regaining much of the lost ground.
Its bullish update comes in contrast to the mood of rivals such as Next, which recently reported a second set of declining annual profits and warned of a further decline next year.
For the wider ABF business – whose products range from Kingsmill bread to Jordans cereal – profits were down by 30% to £603m.
That was thanks to an expected downturn in the group’s sugar business, as well as comparison with a period last year when it had enjoyed a one-off gain on the sale of operations in the US and China.
Meanwhile, JD Sports said profits for the year to 3 February rose by 24% to £294m as like-for-like sales climbed 3%.
Executive chairman Peter Cowgill said it was an “excellent result” and put the performance down to investments made over a number of years including the development of its “multichannel” offering.