Shares in FTSE 100 business Associated British Foods fell on Monday despite the company upgrading its profit expectations for the full year.
At £19.35 per share the ABF share price was last 1% lower in start-of-week trading.
The food and fashion giant said that sales rose 16% during the 12 weeks to 27 May, to £4.7 billion. In the financial year to date sales were up 17% year on year at £14.3 billion.
ABF said that it “continues to trade well” and that, based on current trading conditions, “we now expect the group’s adjusted operating profit for the full year to be moderately ahead of last year.”
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Comparable profits came in at £1.4 billion in the previous financial year (to September 2022).
Primark Revenues Rise By Double Digits
Thanks to higher prices, sales at the company’s Primark budget clothing division rose 13% in the quarter, to £2 billion. On a like-for-like basis sales were up 7% year on year.
ABF said that “Primark has continued to trade in line with our expectations, with summer ranges performing well as the season started in our markets.” It added that sales of its health and beauty products “were particularly strong.”
As well as enjoying “good” sales at its city centre stores, the firm said “the contribution from new and extended stores continues to be strong.” It opened four new stores, in Italy, Slovakia, Spain and the US in the period.
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Its entry into Slovakia means that Primark now operates in 16 markets. The firm also signed a lease to open its first store in Texas, US in the last quarter.
Food Sales Jump
Revenues at ABF’s Food division meanwhile increased 18% year on year to £2.7 billion during the three months to June.
It said that “in particular, we have seen strong constant currency sales growth in Grocery and Ingredients largely driven by the necessary pricing actions taken earlier in the year to offset input cost increases.” Sales at these units rose 13% and 10% in the period.
Revenues at its Sugar sub-division increased 51%, helped by strong conditions in the firm’s African markets.
“Upbeat Results”
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Susannah Streeter, analyst at Hargreaves Lansdown, said that “these upbeat results showed that the company’s lower price points are a big draw as belts are tightened.”
She added that “it’s also fresh evidence of consumer resilience amid the pain of high inflation, with shoppers defying expectations of drawing their purse-strings tighter.”
Streeter noted, however, that “there are still doubts ahead about how long the spending spree will continue.” She said that “if consumers do keep splashing the cash, it’s likely the Bank of England will have to keep raising rates to try and reduce demand.”
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