Primark owner Associated British Foods continues to benefit from sterling devaluation

 
Caitlin Morrison
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Primark profits have also boosted the group's performance (Source: Getty)

Primark owner Associated British Foods (ABF) said today it continues to benefit from the weaker pound, with trading well ahead of where it was this time last year, but warned that the sterling bump will not last much longer.

Shares in the group jumped six per cent in early trading.

ABF said group revenue from continuing business in the 40 weeks to 24 June was up 10 per cent based on constant currency, and up 20 per cent on actual exchange rates. Revenue growth in the third quarter was 13 per cent on constant currency, and 20 per cent on actual rates.

"The results to date reflect a material translation benefit from the devaluation of sterling following the result of the UK referendum on EU membership in June last year," the company said in a trading update.

"At current exchange rates, the translation benefit will be significantly less in the last quarter of our financial year," ABF added, echoing earlier warnings that the positive effects of the lower pound would fade at some point in 2017.

Read more: As Brexit momentum sends sterling tumbling, is a weaker pound better for the UK economy?

Meanwhile, the group was also boosted by stronger profits from Primark "which has marginally improved our group outlook for the full year".

Sales at Primark in the year to date are 13 per cent ahead of last year at constant currency driven by increased retail selling space (up 13 per cent) and growth in like-for-like sales, ABF said. At actual exchange rates sales continued to benefit from sterling weakness and are 21 per cent ahead year to date.

"Third quarter trading was particularly strong in the lead up to Easter, benefiting from comparison with results last year that were affected by poor weather and an earlier Easter holiday," said ABF.

"As a consequence, like-for-like sales in this period were better than the first half of the year. Primark performed particularly well in the UK where year to date sales are nine per cent ahead of last year and we continued to increase our share of the total clothing market."

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