Sep 11, 2017

ABF investors prove wet blankets as Primark weathers the storm

On Monday, the problem was too much regard for futurologists: Lombard believed the UBS and Shore Capital anoraks who reckoned ABF's shares would "React well to the news on Primark" and be "Marked up strongly . . . we reiterate our BUY recommendation." ABF shares duly fell 5 per cent. To be fair to us all, we had got our main assumption about Primark - which accounts for nearly 60 per cent of ABF's £1.1bn pre-tax profit - right. UBS reckoned Primark UK must have grown its like-for-like sales by 7 per cent in the second half, to mid September. If anything ABF's share price fall probably relates to another big assumption about Primark - which is slightly wrong. ABF's Primark would appear to have revived that trend, and even given grounds to perpetuate it: on Monday, it warned of a further currency hit to its margin in the first half of next year - a year in which there will no longer be a beneficial currency translation effect on group earnings.

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