By Adria Calatayud
Associated British Foods PLC (ABF.LN) said Monday that sales at its flagship Primark brand are expected to rise 4% at constant and actual exchange rates in fiscal 2019, and backed guidance for the full year.
For the year ending Sept. 14, the company said higher sales at its Primark low-cost fashion chain will be driven by increased selling space, which will be partially offset by a 2% decline in like-for-like sales. In the fourth quarter, Primark sales growth increased and the performance of its of new autumn-winter range has been encouraging, AB Foods said.
Margins at Primark are expected to be lower in the second half, reflecting the effect of a stronger U.S. dollar, AB Foods said. In the first half, Primark's operating margin was 11.7%, ahead of the year-earlier period, the company said.
The food producer and clothing retailer said sugar revenue and adjusted operating profit will be down compared with fiscal 2018, hit by lower European Union sugar prices and a poor crop in China. Grocery revenue is expected to be ahead of last year with adjusted operating profit well ahead, AB Foods said.
The company said it expected adjusted earnings per share to be in line with the prior year for the group as a whole. Strong profit performances from Primark and the group's grocery operations are expected to be offset by the anticipated decline in AB Sugar, the company said.
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