Associated British Foods Trading Update – What The Analysts Said

By Steve Wynne-Jones
Share this article
Associated British Foods Trading Update – What The Analysts Said

Associated British Foods has said that trading in the 16-week period to 4 January was up 4% on the same period last year, at constant currency levels.

The business saw a 4.5% increase in sales at its Primark business, while its AB Sugar operations were up 7% and Grocery was in line with the previous year.

Here's how leading industry analysts viewed its performance:

Richard Lim, Retail Economics

“While others are shying away from the high street, Primark continues to increase its market dominance through the acquisition of more physical space and investing in store experiences.

“These solid numbers demonstrate that retailers offering a unique proposition, stand-out in the market and have a laser-like focus on executing their vision can continue to thrive.


“There’s no doubt that market conditions are challenging but the retailer is activity reshuffling their store portfolio and benefitting from a weaker retail property market when renegotiating leases and rents. The investment in creating meaningful in-store experiences which merge services and entertainment to sit alongside their retail offering has driven sustainable levels of footfall.”

Chloe Collins, GlobalData

‘‘While Primark has once again delivered impressive top line sales growth, its performance is primarily thanks to a continued focus on store expansion, with the retailer’s selling space now at 15.8 million sq ft, as it has increased its store estate by 12 locations since Q1 FY2018/19.

"However, despite positive l-f-l performances in the Eurozone and the US, and good domestic trading in November and December as its value prices inspired Christmas gifting purchases, Q1 UK l-f-ls declined, continuing the trend from FY2018/19 in which l-f-ls fell 1.0%. While physical expansion remains on the agenda, with entry into Slovakia, its l-f-ls prove that developments within its existing UK portfolio and product improvements must also be a priority."

Barclays European Food Retail Equity Research

"Q1-20 LFL growth was slightly positive driven by a marked recovery in Continental Europe with an encouraging positive LFL. Northern Europe decline rates are much improved with promising signs in Germany under new management. Germany is about a 100bp headwind to Primark LFL, so these green shoots are a good sign. Italy and France are the strongest performers in Europe.


"The UK clothing market improved in Q1, with Primark still outperforming (-0.5% vs market -1.0%). Trading in the UK in November and December was very good, with Xmas encouraging. This is reassuring given mixed statements from peers and worries over high street footfall. We forecast a landmark £1bn of Primark profit in 2020."

Liberum Consumer Team

"ABF offers investors compelling exposure to secular growth trends in retail over the next 10 years. Primark’s customer proposition of the latest fashion at value-for-money prices, sold at large well-managed stores located in high street and shopping centres allows it to outperform the market, particularly at these times of political and macro uncertainty when consumer is keeping its expenditure in check.

"In our view, Primark remains well positioned to take market share and drive mid to high-digit sales growth in FY19-23E, backed by visible new space additions of c.1m sqf p.a. primarily on the Continent and in the UK.

"The overhang from the Sugar business should be removed this year as the reduction in sugar stocks in Europe has led to higher spot prices. The often underappreciated Grocery business continues to execute well, growing sales and expanding profits."


Katy Hutchinson, Davy

Associated British Foods’ (ABF) trading update points to a solid start to the year as the rebuild in Sugar profits begins to transpire. While Primark’s like-for-likes are likely to remain muted through 2020, a more benign FX backdrop should support margin in the second half. A notable improvement in German trading is welcomed. We remain constructive on the stock.

© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

Get the week's top grocery retail news

The most important stories from European grocery retail direct to your inbox every Thursday

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our terms & conditions and privacy policy. You can unsubscribe at any time.