Shares in Primark owner, Associated British Foods, soared after the firm raised its full-year profit outlook for the second time in four months.
The FTSE 100 company now expects full-year adjusted operating profit to be ‘slightly better’ than its previous expectations of ‘moderately ahead’ of last years earnings of around £1.44billion.
ABF said the upgrade was primarily due to strong performance from both its Primark clothing business and its food operations.
The FTSE 100 company raised profit margins primarily due to a strong performance from both its Primark clothing business and its food operations
Associated British Foods shares soared by 6.20 per cent to 2,125.00p in morning trading on Tuesday.
Rhe London-based company said full-year retail sales are expected to be around £9billion, which is 15 per cent ahead of last year, with like-for-like sales growth of 9 per cent.
The business also predicted a strong fourth quarter of sales growth, which it expects to be 15 per cent with like-for-like growth of 8 per cent.
The group put strong sale growth down to ‘selective price increases, well received ranges and strongly performing new stores’.
In terms of food, AB added: ‘We continue to see strong sales growth, particularly in grocery and ingredients and a slightly better than expected performance in sugar.’
As a result, the firm said that it now believed that its adjusted operating profit will be ‘strongly ahead of the previous financial year’.
But ABF cautioned that it expects second half adjusted operating profit margin to be ‘slightly below 8 per cent and for the full financial year to be around 8 per cent’.
It also revealed that it expects Primark’s adjusted profit margin to ‘recover strongly in the next financial year.’
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: ‘Not all retailers are made equal. The group’s savvy model means that starting with bargain prices allows more room to pump up price tags before putting consumers off in this very tough economic climate.
‘The cost-of-living crisis hasn’t stopped customers from flocking to new stores either, which is a direct contradiction of the fortunes of many other large physical retailers who are closing their doors – not opening new ones.
‘For all this to be possible Primark has to have a laser-like focus on its ranges and make sure it’s offering precisely what people want – there is no room for wasted hanger space. This seems to be being executed near perfectly, and is also being supported by Primark’s digital pivot.’
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