Shares slide at Primark/Penneys owner AB Foods

Penneys owner Associated British Foods (ABF) saw its shares slump by 10 per cent on Monday after it said full-year sales at the retail chain have taken a hit from unseasonable weather, with the group's pension scheme also falling into deficit.

Like-for-like sales at Primark are expected to fall by 2 per cent over the year as warm pre-Christmas weather and a "very cold" March and April dampened its performance. However, chain still expects overall annual sales to be 9 per cent ahead of last year, driven by a 9 per cent increase in selling space.

ABF warned that its margins will be squeezed as a result of a weaker pound.

The group also revealed that its pension scheme will fall into a £200 million deficit, compared with last year’s surplus, following a “marked decline in UK long-term bond yields”.

ABF added that, as a result of the weaker pound, there would be a favourable effect on profit margins at its sugar operations and on profits earned outside the UK. Across its businesses, it expects group operating profit to be ahead of last year, partly due to the weakness of sterling. – PA