Primark owner ABF hails sales rebound but prices of some grocery products to rise
Primark owner Associated British Foods is forecasting stronger sales and profits after a bounceback in business at the discount fashion chain.
Bosses said Primark sales are set to jump some 60 per cent for the 24 weeks to March 5, compared with the same period a year earlier, thanks to an easing in pandemic restrictions.
ABF said all of its Primark outlets remained open throughout the period, apart from short periods of closures in Austria and the Netherlands.
Sales across the group’s UK stores are “well ahead” of last year as shoppers flocked back.
In a trading update, the firm added: “UK like-for-like sales have improved and are expected to be 9 per cent below two years ago, and total sales are expected to be 8 per cent below two years ago.
“Stores in retail parks and town centres continue to outperform destination city centre stores, with like-for-like sales in retail parks ahead of pre-Covid levels.”
Primark added that it has been boosted by the opening of 27 stores over the past two years.
ABF said the impact of inflation on raw materials and Primark’s supply chain was offset by cost-cutting and currency changes during the half-year.
However, it said its food businesses, which includes brands such as Ryvita and Twinings, have seen profit margins hit by surging costs, and confirmed it will increase the price of some products.
The company said it expects this arm to recover by the end of the financial year as the benefits of price rises and cost savings filter through.
Richard Hunter, head of markets at investment platform Interactive Investor, said: “Primark’s importance to the overall health of the group has been boldly underlined as the level of lockdown restrictions have waned.
“The habits of the consumer have remained the same, with retail parks and town centres being preferred destinations ahead of city centre locations.
“The lack of a developed online presence, where the company is hoping to launch an improved website by the end of March, has been something of a headwind during the pandemic, but AB Foods is a diversified business where other units have been able to pick up some of the revenue slack.”