Budget retailer Primark achieves 22% growth in sales in 2013

A rise in sales for budget clothing retailer Primark has boosted the profits of its owner Associated British Foods, the BBC reported today.

Primark’s revenue increased by 22%, to GBP4.27bn, for the year ending 14 September 2013. The fashion store’s like-for-like sales also rose by 5%, despite the economic turn down. In addition, the company’s operating profit accelerated by 44% to GBP514m. This was helped by the lower price of cotton and strength in summer trading, which meant there was less need for markdowns in the second half. These results are also said to be due to the company’s low pricing structure and its fast adoption of the latest fashion trends.

Associated British Foods, which also owns British Sugar and several food brands such as Kingsmill, Ryvita and Ovaltine, has reported a 13% rise in full year pre-tax profit to GBP1.1bn. The group’s total increased by 9% to GBP13.3bn.

During the year, Primark expanded in Europe with the opening of 15 new stores, four of which are in the UK and include a second store on Oxford Street in London. The fashion chain now has 257 stores in eight countries around the world. It reportedly plans to open another 13 stores by Christmas, including five in Spain and its first store in Marseille, France.

According to AB Foods, Primark had also made ‘significant progress’ with its ethical trade programme following the collapse of the Rana Plaza factory in Bangladesh in April this year, which killed more than 1,100 people. AB Foods has reportedly paid short-term financial support of six months’ salary to more than 3,600 people who worked in the building, irrespective of their employer. It added that Primark now has 40 in-country ethical trading specialists, including eight located in Bangladesh.

Shares in toy maker Hornby sharply down after profit warning

Toy maker Hornby plc (LSE:HRN) saw its shares fall more than 40% today after announcing that the company will not make a profit this year.

Hornby has blamed disappointing sales of London 2012 merchandise, as well as a disruption to supplies from China, for its weaker performance.

The company had produced a range of commemorative products, such as model taxis and buses, to mark the London 2012 Olympic Games and at the start of the summer it had high expectations for their performance. However, in the end sales were lower than forecast. This was attributed to a large quantity of Olympics merchandise from other licensees and deep price discounting by retailers.

The supply problems relate to a Chinese supplier that is in the process of rationalising its manufacturing facilities. Although this supplier accounts for up to 35% of Hornby’s purchases, this has been reduced from around 75% four years ago. Hornby noted that it is continuing to diversify its supply base in China and in India.

Macro-economic factors are also impacting on Hornby’s performance, with consumer spending still depressed and retailers continuing to buy cautiously, the manufacturer said.

Last year the company made a profit of GBP4.5m.

Hornby’s directors now believe that its results will be approximately break-even for the financial year ending 31 March 2013. The company noted that it continues to benefit from a strong balance sheet. Net debt at 31 August 2012 was GBP7.8m, down from GBP14.3m a year earlier.

Looking ahead, Hornby said that its performance would be “constrained significantly” in the current financial year but the company would be focusing on cost control and has also stepped up its efforts in innovation and product development.

UK retailers John Lewis and Next post higher profit

Retailers John Lewis and Next, two of Britain’s biggest high street names, reported an increase in half-year profit in their financial reports released today.

Employee-owned partnership John Lewis, which operates John Lewis department stores and Waitrose supermarkets across the UK, announced a 60% rise in pre-tax profit in the first half of the year, to GBP144.5m. Revenues for the six months to 28 July were up 8.6% to GBP3.9bn after the company registered strong online growth as well as additional sales linked to the Olympics and Paralympics and the Queen’s Diamond Jubilee.

Consumer demand remains fragile and the pace of growth in the second half is expected to be slower, but it will remain in positive territory, John Lewis said.

A smaller rise in half-year earnings was announced by fashion retailer Next, which declared pre-tax profit of GBP251m for the six months to 31 July, up 10.2% on the same period last year. Half-year revenues grew 4.8% to GBP1.6bn, with a decline in retail like-for-like sales offset by growth in the company’s online business and the addition of profitable new space.

Next is sticking with its full-year guidance that sales, profit and earnings per share will improve on last year.

The company noted, however, that its sales in August and early September have been disappointing and said that it remains cautious about the economic outlook.

Last week the British Retail Consortium (BRC) reported that UK retail sales fell 0.4% in August, as the feelgood factor from the London Olympic Games failed to inspire spending.

BRC director general Stephen Robertson commented that in the run-up to Christmas retailers will be hoping that sales that did not happen in August have been postponed, and not lost entirely.

(USD1=GBP0.62)

HSBC reports profit growth for first half, makes $2bn provision for compensation and US matters

HSBC Holdings plc (LSE:HSBA), the bank’s parent company, said that it had generated pre-tax profit of USD12.7bn in the six months to the end of June, up from USD11.5bn a year earlier.

Profit was boosted by USD4.3bn of gains from business disposals, including the sale of HSBC’s Card and Retail Services business and 138 branches in the US. The results also included USD2.2bn of adverse movements in the fair value of the bank’s own debt attributable to credit spreads, compared with an adverse movement of USD143m in the first half of 2011.

Underlying profit declined 3% to USD10.6bn. HSBC revealed that it had set aside USD1.3bn for compensation regarding the mis-selling of PPI and interest rate hedging products in the UK and USD700m to cover “certain law enforcement and regulatory matters” in the United States.

“We apologise for our past mistakes in relation to anti-money laundering controls,” said group chief executive Stuart Gulliver, adding that it is a priority for the bank’s senior management to build on steps already taken to manage risk and ensure compliance more effectively. Group chairman Douglas Flint also said that he was “very sorry” for mistakes made by HSBC in the past.

Group revenues fell to USD29.6bn, from USD31.1bn in the first half of last year. On an underlying basis revenues were 4% higher than in the first half of 2011 thanks to strong growth in emerging markets, particularly in Hong Kong and the rest of the Asia-Pacific region and in Latin America.

Home Retail Group reports slowdown in sales decline at Argos

UK-based household goods retailer Home Retail Group plc (HRG) (LSE:HOME), which owns Argos and Homebase, reported today that sales at Argos fell at a slower rate in its first quarter, while sales at Homebase DIY stores were affected by the recent bad weather.

At Argos like-for-like sales declined by 0.2% in the quarter, compared to a fall of 8.5% in the previous quarter.

The company recorded improved sales of consumer electronics, driven by continued strong growth in laptops and tablets which offset a drop in sales in the TV, audio and video gaming categories.

Total sales grew by 0.2% to GBP819m.

Argos registered a 24% increase in sales through its online Check & Reserve service, with these sales now representing 29% of total Argos sales. Total Internet sales grew 17% and represented 41% of the total Argos sales.

Total multi-channel sales for the company represented 51% of its sales, up from 46% a year earlier.

In the Homebase business total sales in the first quarter declined by 8.1% to GBP421m and like-for-like sales were down 8.3%.

According to HRG the decrease in Homebase sales was mainly due to poor sales of seasonal products, which represented about 40% of total sales and fell by around 15% because of the wet start to the summer, which meant that customers were less interested in buying things like garden furniture.

Chief executive Terry Duddy remarked that the first quarter was a “particularly volatile trading period”, but said that Argos had a solid start to the year supported by its multi-channel performance.

At this stage in the financial┬áthe group is “comfortable with current market expectations” for its full year profit, the chief executive added.

Tesco sales down again in UK market

UK-based supermarket retailer Tesco plc (LSE:TSCO) announced today a further decrease in quarterly sales in its home market.

The retail giant said that like-for-like sales in the UK, excluding petrol and VAT, declined by 1.5% in its first quarter ended 26 May 2012, compared with the same period last year.

Overall, Tesco’s group sales in the 13 weeks increased by 2.2% and the company said that it had performed “robustly” in the first quarter despite subdued consumer confidence in all of its markets.

Chief executive Philip Clarke confirmed that the retailer is focusing on the implementation of its six-point plan to revive its fortunes in the UK grocery sector, noting that the company has recently put extra staff into 700 of its stores and relaunched the Everyday Value range.

Tesco announced earlier this year that it would invest GBP1bn to improve the shopping trip for customers and lift results in its UK operations. So far a total of 4,300 additional new staff have been recruited and trained and they are working in fresh food and Beers, Wines & Spirits departments in every Extra and Superstore. In addition, more than 145,000 staff have been given specialist training relevant to their department.

According to Tesco the UK market remained very competitive in the quarter, with a significant amount of couponing activity. Nevertheless, directly after the quarter ended, in the run up to the Diamond Jubilee, Tesco recorded its biggest ever week outside the Christmas period with sales exceeding GBP1bn.

Further afield, the retailer saw continued growth in market share in 11 of its 12 international markets during its first quarter. At constant exchange rates, total sales grew by 9.1% in Asia and by 6.0% in Europe.

Tesco is currently performing in line with market expectations and the retailer’s outlook for the year as a whole remains unchanged.

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Dubai Islamic Bank reports an 11% increase in first quarter net profit

Dubai Islamic Bank booked a net profit of AED245m (USD66.7m/EUR50.4m) in the first three months of the year, up 11% from the AED222m recorded in the same period in 2011, the Dubai-based lender said on Sunday.

The bank’s revenue eased to AED1.23bn in the first quarter from AED1.28bn in the first three months of 2011. The lender’s core business saw continued growth in the period, with income from financing and investing assets and investment sukuks rising by 2%. Dubai Islamic Bank booked additional provisions of AED299m in the period, continuing to boost its balance sheet.

Customers deposits at the bank amounted to AED68.1bn at the end of March, up from AED64.7bn at the end of 2011. Total assets added up to AED92.5bn as of 31 March.

The bank’s liquidity position remained strong, with its financing-to-deposit ratio stable at 77% at the end of March. The lender’s capital adequacy ratio under Basel II was 18.2% as of 31 March.

During the quarter to March, the bank opened three branches, which brought the total number of branches across the UAE to 74. The bank also launched its portal Al Islami Business Online, offering more than 75 services.

AstraZeneca CEO David Brennan announces early retirement as first quarter profit falls 38%

Anglo-Swedish pharmaceutical company AstraZeneca plc (LSE:AZN) (STO:AZN) (NYSE:AZN) announced today that its chief executive, David Brennan, has decided to retire and step down from the board at the start of June.

Executive director and chief financial officer Simon Lowth will take over as interim chief executive officer from 1 June 2012 until a permanent successor is in place. At the same time Julie Brown, vice president Group Finance, will become interim chief financial officer

Louis Schweitzer will also retire as non-executive chairman on 1 June 2012, three months earlier than originally planned. He will be succeeded on that date by Leif Johansson, who will become chairman of the Nomination and Governance Committee after today’s annual general meeting, AstraZeneca said.

The departure of AstraZeneca’s top two executives was announced on the day the company published its first quarter financial results, revealing that pre-tax profit for the period fell 38% to USD2.05bn, from USD3.29bn a year earlier. Core earnings per share (EPS) amounted to USD1.81, a 19% decline at constant exchange rates compared with the first quarter last year. Excluding two one-off gains last year, core EPS would have increased by 2%.

Revenue for January-March totalled USD7.35bn, a decrease of 11% at constant exchange rates.

AstraZeneca blamed the disappointing results on a loss of exclusivity on several key brands, which it said accounted for eight percentage points of the revenue decline.

Meanwhile revenue from emerging markets increased by 1% at constant exchange rates, reflecting anticipated quarterly phasing. The company expects a rebound in the remaining three quarters, but said that achieving double-digit growth for the full year may be a challenge.

Looking ahead, AstraZeneca has lowered its core EPS target for the full year to the range of USD5.85 to USD6.15 and said that the decline in revenue for the full year is expected to be in the range of the low to mid-teens in constant currency terms.

Supermarket giant Tesco reports declining profits in home market

UK-based supermarket retailer Tesco plc (LSE:TSCO) announced today an increase in group profit for the year to 25 February 2012 but a decrease in profit generated in its home market.

Pre-tax profit for the 12-month period rose 5.3% to GBP3.8bn. In the UK Tesco’s profit fell 1.0% to GBP2.5bn, while its international operations recorded profit of GBP1.1bn, up 17.7% compared with the previous year.

Tesco has been working on plans to revive its fortunes in the UK grocery sector and the company announced today that it has committed GBP1bn to improve the shopping trip for customers. This investment will be targeted at recruiting more store staff, speeding up store updates to bring a warmer look and feel, offering better prices and promotions, re-launching the Tesco brands and offering better ranges, providing clearer and more relevant communication with customers and rolling out its Click & Collect online ordering service.

The company said that it will take on more than 8,000 new staff in existing stores and will create a total of 20,000 net new jobs over a period of two years.

Commenting on the year’s results, chief executive Philip Clarke said, “Whilst our International business is delivering excellent growth, contributing GBP1.1bn of profit to the group, we fully recognise that we need to raise our game in the UK.”

Tesco’s group sales for the year increased by 7.4% to GBP72.0bn, or a 5.9% increase excluding petrol.