Primark sales surge as Associated British Foods boosted by price hikes and record Christmas demand
- ABF’s turnover soared 16% to £6.7bn in the 20 weeks to January 7
- Solid revenue growth was recorded across all of its food and retail businesses
- In addition to Primark, the company owns the brands Ryvita, Kingsmill and Twinings
Revenues at Associated British Foods increased in the final weeks of 2022 and strong demand and price increases helped offset a tougher economic backdrop.
The Primark owner’s revenue rose 16% at constant currency to £6.7bn in the 20 weeks to January 7, with solid growth recorded across all of its food and sale to detail.
Primark sales beat expectations following record demand in the week leading up to Christmas Day, as well as higher average selling prices. Growth was also flattered by the Covid-related restrictions in place the year before.
Primark benefited from the reopening of stores, but said the pingdemic was now driving sales
UK trade was supported by the rebound in footfall at key city center outlets, more normalized markdown levels and the retailer increasing its share of the clothing, footwear and accessories market.
In Europe and the United States, sales were supported by the opening of new stores in cities such as New York, Naples and the Romanian capital Bucharest.
The retailer’s adjusted operating profit margin was better than expected, but remains below 2019 levels, due to higher labor and energy costs, transportation rates and l appreciation of the US dollar.
Primark does not plan to impose any further price increases beyond those already planned until next summer to ensure its products remain affordable.
Even so, ABF warned that the current economic difficulties “could weigh on consumer spending in the months ahead.”
Inflationary pressures continue to affect the FTSE 100 group’s food business, but it noted that some raw material costs have fallen while other input costs have been offset by price increases, particularly in its food segments. .
Its sugar arm saw the biggest increase in sales, climbing more than a quarter to £795m, despite UK production hit by bad weather as it benefited from higher sugar prices and co-products in Europe and Africa.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “One of ABF’s key strengths is its diverse business portfolio, which includes many well-known food brands such as Kingsmill, Ryvita and Twinings.
“This diversification helps mitigate risk and ensures that the business is not overly dependent on one particular product.”
The London-based company nevertheless expects its overall adjusted operating profit and adjusted earnings per share to be lower this year despite substantial revenue growth.
Shares of Associated British Foods were down 1.55% at 1,840.5p late Tuesday morning, although they are still up around 37% in value over the past three months.