If you think Primark’s growth is over the hill, think again. Analysts at Liberum reckon the prize asset of Associated British Foods could double sales and profits in just five years. The pile them high, sell them cheap clothing retailer’s 70,000 square foot store in Boston is set to open next month in its first foray into the US market, a notoriously tough nut to crack — just ask Marks & Spencer and Tesco. It has also signed leases for eight more stores in some of the most popular shopping malls across the north-east of America. Liberum’s Robert Waldschmidt says Associated British Foods has taken a cautious approach to its US venture, committing around £200 million and structuring leases that allow a “fast fail” if it flops. He expects the launch to be a success, with word of mouth among the thousands of students in Boston helping to spread the word about Primark’s discount clobber. But the analyst points out its European business is still only getting going, having just moved into Italy. “We believe investors are overly focused on whether US entry is successful and are ignoring the fact that Primark’s Continental roll-out is only getting started,” Waldschmidt said. Shares in Associated British Foods fell 20p to 3191p along with the wider market, which has taken a hammering on Chinese growth fears. The FTSE 100 was in the red for the ninth straight trading session, down 36.48 points to 6331.41. Investors rushed to the safe haven of precious metals stocks, adding shine to gold producer Randgold Resources, up 36p to 4291p, and silver miner Fresnillo, which put on 9p at 693.5p. IPhone chipmaker ARM Holdings, down 23.5p to 873.5p, got no helping hand from Liberum, which cut its target price to 650p. The broker insists ARM is still a smartphones play and reckons slowing sales in China, the world’s largest smartphones market, spell bad news for the firm’s growth prospects. Drugmaker Shire fell 70p to 5005p as UBS suggested it faces “huge difficulty” in sealing a deal for US rare diseases rival Baxalta. Troubled temporary power provider APR Energy, down 6.75p at 83p, received a $8.4 million (£5.4 million) payment from its terminated project in conflict-torn Yemen. APR wrote off the project this month, taking a $24 million hit, but today said it has been able to access the project and will reassess the size of the writedown. Meanwhile, AIM tiddler Rose Petroleum tanked 0.03p to 0.2p as it scaled back risky exploration efforts in the light of lower oil prices.
Liberum analyst, Robert Waldscmidt, expects Primark's entry to the US market will double its sales and profits. He thinks the launch of its initial store will be a success, aided by eight of students in Boston helping to spread the word. He also things that investors are overly focused on the US launch, and are ignoring the fact that Primark is only just getting started in Continental Europe,