Primark sales boost shares in AB Foods

STRONG demand for cheap clothes yesterday prompted Primark owner Associated British Foods to hike its full-year earnings forecasts.<br /><br />AB Foods finance director John Bason said Primark like-for-like sales rose by seven per cent in the six months to 12 September, in contrast to declining sales at high street rivals such as Marks Spencer and Next.<br /><br />Primark, which accounts for almost a third of the group&rsquo;s business, has become the retail star of the downturn, reporting repeated sales growth as shoppers flock through its doors to snap up cheap goods.<br /><br />AB Foods, 55 per cent owned by the family of chief executive George Weston, said it now expected &ldquo;some progress&rdquo; in adjusted earnings for the year ending 12 September, compared with its previous forecast for a flat outcome.<br /><br />The news prompted analysts to rush through upgrades on the stock, sending the share up 4.13 per cent to 845.5p. Shore capital analyst Clive Black said: &ldquo;After a sustained period of investment in acquisition and organic development... ABF may be on the threshold of delivering rising earnings growth, capital returns and dividends,&rdquo;<br /><br />Growth was also driven by a big rise in profits at the group&rsquo;s sugar and agriculture business.<br /><br />ABF, which owns the Silver Spoon brand, said it received &pound;120m from the sale of its Polish sugar business earlier in the year, which will result in a further reduction in the group&rsquo;s debt pile.