Associated British Foods has said that trading at its Primark fashion retail business has made an 'encouraging' start to the 2022-23 year as it reiterated a forecast that group profit would fall over the year.
In a statement published ahead of its annual shareholders' meeting on Friday, Associated British Foods, which also owns major sugar, grocery, agriculture and ingredients businesses, said it continued to expect significant growth in sales but with adjusted operating profit lower than the 2021-22 outcome.
Last month the group reported adjusted operating profit of £1.44 billion (€1.67 billion) for 2021-22.
"Our outlook for the full year is unchanged. We continue to expect further significant input cost inflation, but the volatility of our input costs has diminished," said chairman Michael McLintock.
Primark is on track to add 27 new stores in the current financial year, with six open so far, he said.
Shares in AB Foods have fallen 18% so far this year.
Investment In Spain
Earlier this week, Primark announced it plans to invest €100 million to open new stores and refurbish existing ones in Spain, its second largest market after Britain.
The clothes retailer will open eight new stores throughout the country, including on the island of Lanzarote and the enclave of Melilla, the company said in a statement.
Commenting on its performance, Russ Mould, investment director at AJ Bell, said, “Amid the current consumer turmoil, for a retailer to stick to its guidance is an achievement in itself. Primark-owner Associated British Foods’ in-line trading update will provide a healthy dose of reassurance to its shareholders – even coming, as it does, just weeks after full year results.
“While inflationary pressures remain the simple fact that input costs have become less volatile gives investors more visibility and also makes it lot easier for the business to plan for the future. The company’s conglomerate structure has been a strength in 2022 as the food and ingredients business has proved resilient and that continues to be the case."
“Primark is off to a strong start to the current financial year and the continued roll-out of stores is a show of confidence that the budget chain’s offering will resonate with shoppers in a difficult economic environment."
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