Penneys owner sticks to plans for US, Europe expansion

Associated British Foods said it was sticking to plans to expand its Primark clothing chain across Europe and the US, and was optimistic about its continued growth despite the uncertainty created by Britain's vote to leave the EU.

AB Foods, which also has sugar, grocery, agriculture and ingredients businesses, upgraded its earnings guidance on Thursday, reversing a previous forecast for a marginal decline, due to an improvement in its sugar business and the weaker pound.

For this financial year, AB Foods said it no longer expected its adjusted earnings per share to decline from the 102 pence it made in 2014-15.

Looking to next year, however, the company said that if the pattern of weaker sterling since the referendum vote in June was to continue into its new financial year which starts in September, it would have both positive and negative impacts on its profit.

At Primark, the clothing chain that trades under the Penneys brand in Ireland, it said the profit margin on its UK sales would be dented by the weaker pound as it buys clothes in dollars, while margins in its sugar business would benefit from the move.

The Brexit vote has thrust Britain into its worst political crisis in modern times and rendered its economic prospects uncertain, leading to analyst worries about future consumer and business spending.

Sterling fell to a 31-year-low on Wednesday, dipping below $1.28. It was trading at $1.50 on June 23rd, the day of the EU referendum.

Reuters