Primark owner ABF raises profit outlook again as costs ease

Primark’s parent firm has lifted its profit guidance again after a boost from its fashion chain and food businesses in recent months.

Associated British Foods (ABF) told shareholders its outlook for the past financial year to 16 September is "slightly better" than previous guidance, which said group-adjusted profit would be "moderately ahead" of last year.

It is the second upgrade by the company in about three months.

Primark has benefited from easing costs compared with the previous year, recording improvements in cotton, freight and energy costs, bosses said.

The group’s store growth plan, which has also seen it expand previous sites or swap for larger locations, is also expected to improve profits.

Sales in the retail arm are set to have risen by 15% to £9 billion for the year.

Primark sales are expected to have risen 8% in the UK over the final quarter of the year, with a like-for-like rise of 7%.

The group said transactions and footfall were impacted by "unusually variable and unseasonable weather, especially in July", but stressed that its overall performance remained resilient.

George Weston, ABF chief executive, said the retailer has benefited from shoppers returning to the high street this year as well as successful ranges, such as Barbie products.

"We have had a very good year, which saw us take market share," he said.

"There has been growth from people regaining the confidence to the high street but I think we have also benefited from the difficulties facing some of our competitors, such as Debenhams.

"We’ve found success across a lot of ranges, such as our slightly higher priced items, which we think have brought customers over from Zara or perhaps stores that have gone over the past year or two.

"Over the summer, we also had a Barbie range which sold through, so clearly people are still very happy with our product offering."

Elsewhere in the business, the group said it has seen "strong sales growth" in its grocery and ingredients businesses, alongside a "better-than-expected" performance in sugar.

The company said its grocery business performed "slightly ahead" of target after strong performance from brands such as Twinings, Ovaltine, Blue Dragon and Patak’s.