AB Foods keeps earnings guidance after Primark’s solid Christmas

Associated British Foods kept its full year earnings outlook on Thursday, partly due to solid revenue growth at its Primark fashion chain in the key Christmas trading period.

The group, which also owns major grocery, agriculture and ingredients arms, said on Thursday it still expected “progress” in adjusted earnings per share in the full 2019-20 year.

For the 16 weeks to January 4th group revenue from continuing operations was up 4 per cent year-on-year on a constant currency basis, with Primark sales up 4.5 per cent on the same basis.

But the retailer’s sales growth was due almost entirely to an increase in selling space.

In the UK, Primark’s sales rose 4.0 per cent, with a “marginal” decline in like-for-like sales. Primark said it won market share in a UK clothing sector that has struggled for growth in the run-up to Christmas.

Primark’s operations in the Eurozone and in the US both achieved like-for-like growth.

As AB Foods had previously flagged, Primark’s operating profit margin in the period decreased. That reflected the effect of purchases contracted at a stronger U.S. dollar exchange rate than the previous year, partially mitigated by cost reductions in both the cost of goods and overheads.

The group also forecast a material improvement in sugar profit in the year, weighted to the second half. AB Sugar’s revenue rose 7 per cent in the period. – Reuters


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