// Primark owner Associated British Foods has upped its outlook for the full year after reporting a jump in sales at the budget fashion retailer
// UK trading was “particularly strong” and sales growth for the half year is expected to be up 15%, “driven by an increase in like-for-like sales of 14%”
Primark owner Associated British Foods said it has been boosted by better-than-expected trading at its value retail division.
As a result, the group has lifted guidance for the full year, aided by a “material improvement” at Primark and said it now expects “an improvement to our previous expectations of adjusted operating profit in the second half as a result of higher sales and some lower operating costs”.
The group said sales at the retailer, which has 419 stores, are set to rise by 16% at actual exchange rates to £4.2 billion in the first half to March 4, up 10% on a like-for-like basis – and ahead by 14% in the UK.
AB Foods said while it continues to see “significant” cost pressures, consumer spending has “proven to be more resilient in this trading period than anticipated at the start of the financial year”.
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AB Foods did caution over consumer spending in the second half as the cost-of-living crisis continues to put households Brits under pressure.
It said Primark’s first-half performance was boosted as it came up against comparatives from a year earlier, when Omicron hit trading, and that like-for-like sales growth will slow in the final six months.
It added that first-half trading was “good in all markets, well ahead of expectations, and represents a material improvement in both the UK and Europe on the second half of our last financial year”.
The UK was particularly strong and sales for the half year should grow by 15% with like-for-like sales up 14%.
Primark’s share of the total UK clothing, footwear and accessories market by value rose in the 12 weeks to 8 January (up to 6.8% this time from 6.3% a year ago).
It said: “We expect Primark total sales to be 16% ahead of the same period last year [at constant currency] driven by like-for-like sales 10% ahead as a result of higher unit volumes and higher average selling prices. Footfall increased strongly in both the UK and in Europe.”
The retailer said there had been a “very positive reaction” to its spring and summer ranges.
Primark said: “Looking ahead to the second half, we remain cautious about the resilience of consumer discretionary spending in the face of continuing inflation in the cost of living and higher interest rates.
“Our expectation is that like-for-like sales growth in the second half will be lower than that achieved in the first half but, based on our experience to date, will be better than our previous expectation.”
“As a consequence, sales densities will improve compared to the same period in the prior year. Sea freight costs have returned to more normal levels and energy costs are much reduced recently.
“However, the cost of bought-in goods will be higher due to the strength of the US dollar against sterling and the euro and higher wage costs are expected. Taking these factors into account, we now expect full-year margin for Primark to be above 8%.”
The group added that it is rolling out the launch of its Primark website – already up and running in the UK and Ireland – to Germany, Spain, France and the US soon, with other markets by the summer.
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