High street woes put the brakes on Primark

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Primark, owned by Associated British Foods (ABF), is used to wowing the stock market with dramatic increases. Today, it conceded that like-for-like sales in the third quarter are flat at best, though this remains a much better performance than rivals at Next or Marks & Spencer can boast.

Primark faced embarrassment last month when the BBC's Panorama found that some of Primark's Indian suppliers were using child labour. The company has since fired three Indian firms, insisting it would "never knowingly permit such activities".

Finance director John Bason today insisted the bad publicity had not hurt sales.

"I haven't seen any impact on trading. We gave a robust response to the allegations, we embraced the issue and we take it seriously," he said. "Trading is resilient. The UK consumer is suffering a little, but the group is very well placed."

Overall Primark sales rose by 14%, thanks to new space and new stores. Panmure Gordon, the house broker, said this "compares favourably with many clothes retailers".

Primark trades from 179 stores, eight of which are in Spain. It was always regarded as a likely beneficiary of the credit crunch as consumers traded down and embraced its cheap-andcheerful approach.

Primark turned a profit of £200 million-last year on sales of more than £1.6 billion, making it one of the most successful stores on the High Street.

ABF also owns Kingsmill bread - indeed it was the first company to sell sliced bread in the 1930s.

It has lately noticed an increase in sales of white bread, a further sign that hard-pressed shoppers are getting back to basics.

Its grocery arm saw sales in the 16 weeks to 21 June rise 30% while sugar was up 21% and agriculture was up 42%.

ABF shares have fallen on concerns about inflation.

Panmure Gordon said today: "While ABF is not immune to the economic environment, its business is resilient and we continue to expect it to deliver against market expectations this year." The shares today tumbled 291/2p to 7381/2p.