Associated British Foods said that its Primark trading division posted 'record' sales in the week before Christmas, boosting the overall group's sales 4% in the 16 weeks to 6 January.
However, the banner's sales in Europe were impacted by warm autumn weather, the company said.
According to a trading update issued this morning, sales at Primark were 7% higher than in the same period last year, at constant currency levels, as a result of increased selling space, which has increased by 0.3 million square feet since financial year end.
Primark's UK business posted 'strong like-for-like sales', the company said, however performance across Europe was 'held back' somewhat by unseasonably warm weather in October.
“Northern European markets were the toughest for us in October, particularly in Holland,” commented the company's CFO, John Bason, as reported by Bloomberg. “Some markets were down double digits.”
Primark opened five new stores in the period, in Bielefeld, Munster and Stuttgart in Germany, Charlton in the UK and the Algarve.
Grocery Performance
The group's Grocery division posted a 4% increase in sales at constant currency levels, and a 1% increase at actual rates, with its Twinings and Ovaltine brands both delivering 'good sales growth', the company said.
Balsamic vinegar brand Acetum, which the company acquired last year, delivered 'sales in line with our expectations', it noted, with its ACH business 'trading strongly' in the US, and George Weston Foods in Australia posting improved margins.
The group's AB Sugar operations, however, posted a 12% decline in revenue at constant currency levels (-13% at actual currency levels), as a result of lower EU sugar prices, which the group expects to impact its full year revenue from sugar.
'The EU sugar regime ended on 30 September 2017 resulting in the end of sales quotas and the removal of constraints on exports,' the company noted. 'Sugar production in the EU during the 2017/18 campaign is expected to be substantially higher than last year as a result of exceptionally high beet yields and increased crop area.'
Elsewhere, the group's AB Agri revenue was 13% higher at constant currency levels, (12% higher at actual exchange rates).
Overall, the group said that 'other than the expected reduction in Sugar revenue, sales growth was delivered by all of our businesses and their combined revenue was 6% ahead at constant currency'.
Post-Brexit Strategy
Back in November, Associated British Foods noted that it was studying a number of 'Brexit scenarios' as it plans its strategy for after the UK leaves the Single Market, according to Bloomberg.
The news outlet quoted CFO John Bason as saying that the company has been "planning for a future under similar trading terms to the ones we’ve got at the moment and we started thinking about what we would do if those trading terms were very different. [...] We began thinking a while ago about what we would do in different scenarios but until we get to those scenarios we don’t want to do any of it.”
However, the company is confident that changes in legislation and trade agreements will 'significant opportunities for the food industry to replace imported food and build export markets'.
© 2018 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.
