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Retail

Associated British Foods Expects Primark Business To Bounce Back

Associated British Foods has forecast a significant increase in sales and profit at its Primark fashion chain in its new financial year, after its 2020-21 performance was dented by store closures due to the pandemic.

The group said it expected Primark's sales to increase by at least the estimated £2 billion lost to closures during the crisis, with its adjusted operating margin, recovering to over 10%.

Revenue fell 5% and profit fell 11% in 2020-21.

Supply Chain Concerns

'Primark is not immune to the challenges of supply chain, raw material cost and labour rate inflation. However, we currently expect the impact of these to be broadly mitigated by the transaction currency gain arising from the weaker U.S dollar, improved store labour efficiency and lower operating costs,' AB Foods said.

The group, which also has major sugar, grocery, ingredients and agriculture operations, said it was seeing significant cost increases in energy, logistics and commodities in addition to the impact of port congestion and road freight limitations.

It said it was working to offset the impact of these through cost savings. Where necessary, its food businesses will also implement price increases, it said.

Profit Performance

In the 53 weeks to September 18, the group made adjusted earnings per share of 80.1 pence and adjusted operating profit of £1.01 billion, both down 1%.

It forecast "significant progress" in 2021-22 on both measures.

The company also plans to pay a special dividend after its balance sheet and cash flow recovered from the hiatus of the pandemic.


News by Reuters, edited by ESM. For more Retail stories, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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