Primark owner lifts full year outlook amid strong consumer spending
The group said sales are set to rise by 16% to £4.2 billion in the first half to 4 March 2023.
As outlined in its financial results on 24 January 2023, Associated British Foods continued to encounter "significant" cost pressures. However, consumer spending has been more resilient in this trading period than anticipated at the start of the financial year.
As a result, the group's expectations for the full year have improved. In the second half, the recovery of inflation in input costs remains a "management priority" but inflation has become less volatile and recently some commodity costs have declined.
Associated British Foods also expects group-wide half-year operating profits to be flat and for annual group-wide underlying earnings to be broadly in line with the previous year, against prior guidance for lower earnings.
Looking specifically at Primark, the business has traded "very well", with total sales expected to rise 19% to £4.2 billion for the half year. This represents a material improvement in the UK and Europe, driven by "great quality at affordable prices and attractive store experiences proving increasingly appealing to both existing and new customers".
Footfall remains "strong" in major city centres, as well as on high streets and retail parks. All new stores opened in the period are "performing well" and have high sales densities. The group expects retail selling space to total 17.8 million sq ft at the half year against 17 million sq ft a year ago.
Last month, Associated British Foods boasted "record" sales in the weeks leading up to Christmas Day. Sales in the UK were up by 15% over the four-month period to 7 January 2023 and the group's share of the clothing, footwear and accessories market jumped to 7% from 6.5% last year.
Last week, Primark announced it is set to double its presence at East London's Westfield Stratford, creating 250 new jobs and expanding from 45,100 sq ft to 81,000 sq ft.