Primark exceeded expectations, says AB Foods (ABF.L)

In a new business update, Associated British Foods says its arm of fashion retailer Primark had better like-for-like sales compared to the same quarter last year, helped by store openings linked to the pandemic.

The trendy sugar group also said it expected “significant progress” in adjusted operating income and earnings per share for the half-year and full year.

ABF shares opened at 1,925 pence and climbed to 1,941 pence in early morning trading. This share price remains well below its highest annual level of 2,528 pence. The Annual General Meeting of Associated British Foods is scheduled for today morning.

Enough stock for Christmas

Primark has 400 stores in Europe and the United States and says supply chain disruptions have been managed by prioritizing products in greatest demand with the support of logistics partners.

“We have stock coverage on the vast majority of lines for the important Christmas trading season. “

Public health measures “taken so far in our markets are mainly restrictions on trading hours in the Netherlands, the requirement for vaccine passes in Germany and the closure of our five stores in Austria”.

Primark, like other retailers, remains vulnerable to changes in government policy as the Omicron variant spreads.

Price increases in pencil

The grocery, sugar, ingredients and agriculture trade is in line with expectations, AB Foods added.

“We are feeling the impact of widely reported port congestion and road freight limitations and our companies have worked hard to overcome these challenges. ”

AB Foods also said it has seen escalation in energy, logistics and commodity costs “and we have implemented plans to offset these through operational cost savings and, if necessary, the implementation implementation of price increases ”.

‘Significant progress’

Considering all of these factors, “we continue to expect significant progress, both half-year and full-year, in adjusted operating income and adjusted earnings per share of the Group,” the company said this morning.

Primark opened two new stores, one in Vigo, Spain, and the other in Catania, Italy, bringing its total sales area to 17 million square feet.

Sales in parts of Europe have already been affected by a lack of tourism, although Primark has also had to bear less pressure on personnel costs.

Read more: UK GDP still below pre-Covid levels, according to ONS figures

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