Higher VAT and costs will hurt profits

first_img Read This Next’A Quiet Place Part II’ Sets Pandemic Record in Debut WeekendFamily ProofHiking Gadgets: Amazon Deals Perfect For Your Next AdventureFamily ProofYoga for Beginners: 3 Different Types of Yoga You Should TryFamily ProofBack on the Rails for Summer New York to New Orleans, Savannah and MiamiFamily ProofAmazon roars for MGM’s lion, paying $8.45 billion for studio behind JamesFamily ProofIndian Spiced Vegetable Nuggets: Recipes Worth CookingFamily ProofTortilla Mango Cups: Recipes Worth CookingFamily ProofWhat to Know About ‘Loki’ Ahead of Disney+ Premier on June 9Family ProofCheese Crostini: Delicious Recipes Worth CookingFamily Proof KCS-content Show Comments ▼ by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeTotal PastThe Ingenious Reason There Are No Mosquitoes At Disney WorldTotal PastUndoNoteabley25 Funny Notes Written By StrangersNoteableyUndoMoneyPailShe Was A Star, Now She Works In ScottsdaleMoneyPailUndoSerendipity TimesInside Coco Chanel’s Eerily Abandoned Mansion Frozen In TimeSerendipity TimesUndoBetterBe20 Stunning Female AthletesBetterBeUndomoneycougar.comThis Proves The Osmonds Weren’t So Innocentmoneycougar.comUndoautooverload.comDeclassified Vietnam War Photos The Public Wasn’t Meant To Seeautooverload.comUndoZen HeraldThe Truth About Why ’40s Actor John Wayne Didn’t Serve In WWII Has Come To LightZen HeraldUndoCrowdy FanShe Didn’t Know Why Everyone Was Staring At Her Hilarious T-ShirtCrowdy FanUndo whatsapp Sharecenter_img IN recessions past, hard-up consumers have had to make do and mend. This time, they’re buying cheap and chucking away. Yesterday’s pre-close update from AB Foods showed that Primark, a leading purveyor of so-called “disposable fashion”, is going from strength to strength. Full-year like-for-like sales at the budget retailer are forecast to be six per cent higher over the year, more modest than the eight per cent gain in the first half, but still impressive considering the tough comparatives (Primark grew like-for-like sales by nine per cent in the second half of 2009). Operating margins are also expected to have improved, thanks to Primark’s famously low operational gearing. Sadly, this is as good as it gets. In 2011, Primark will be hit by a triple whammy of higher cotton prices, VAT hikes in the UK and Spain and increased freight costs. No business model – not even one as good as Primark’s – will be able to withstand such headwinds. Elsewhere the picture is mixed. The sugar division is expected to be substantially more profitable than it was in 2009, with improvements in China and the UK offsetting the effects of heavy rainfalls on the Spanish operations. The grocery division is growing at a much more modest rate than the rest of the business. Its bread brands, Allinson and Kingsmill, are struggling to compete in a cut-throat market. They are in a race to the bottom – in terms of price and marketing cost – with Hovis, owned by Premier Foods. AB Foods has done well to prosper in these times, but it has also been rewarded, with a valuation that is 17.3 times earnings. That is a hefty premium to the rest of the sector, and in light of worsening conditions ahead, it is frankly undeserved. whatsapp Higher VAT and costs will hurt profits Monday 13 September 2010 7:45 pm Tags: NULLlast_img

Leave a Reply

Your email address will not be published. Required fields are marked *