// AB Foods says its full-year adjusted operating profit is now expected to surpass the previous year’s despite lower-than-expected sales
// The group said Primark had seen a significant improvement in trading as the quarter progressed
Associated British Foods (AB Foods) said that adjusted operating profit in the fourth quarter for both the food businesses and Primark will top expectations.
The fast-fashion retailer is expected to have an operating profit margin of over 10 per cent due to lower labour costs, as it didn’t replace staff after they retired or resigned in a process called “attrition”
Sales dropped 17 per cent in the fourth quarter compared to two years ago after the Delta variant hampered an initial phase of pent-up demand when stores reopened.
Despite this, Primark’s like-for-like sales in the third quarter were 3 per cent ahead of the same period two years ago reflecting strong trading in the UK alongside European regions where stores had reopened.
The group said Primark had seen a significant improvement in trading as the quarter progressed, from a weekly decline in like-for-like sales of 24 per cent at the start of the period to a decline of 10 per cent in recent weeks.
Despite the shortfall in Primark’s sales the group has still raised its profit outlook for the full 2020-21 year, reflecting strong profit margins at the fashion business.
For the full year, the group now expects AB Sugar to deliver an even greater improvement in adjusted operating profit over last year than previously expected, while Primark’s adjusted operating profit, stated before repayment of job retention scheme monies, is expected to be ahead of last year