Associated British Foods has said that it expects like-for-like sales at its Primark retail division to be down 1% in the second half of its financial year.
The group, which also owns the Twinings and Ovaltine brands, made the announcement in a trading update prior to entering the close period for its interim results for the 24 weeks to 3 March 2018, which are scheduled to be announced on 17 April.
'Unseasonably Warm'
It noted that 'unseasonably warm weather in October' led to a 'significant decline' in like-for-like sales at Primark that month, which impacted the banner's half year sales.
Nonetheless, ABF said that it expects Primark's sales to be 7% ahead of the same period last year, at constant currency levels, 'driven by increased retail selling space'
Sales are expected to be 9% ahead of last year at actual rates.
It noted that Primark 'achieved record sales in the week before Christmas', while early trading of the new spring/summer range has been 'encouraging'.
Seven new Primark outlets were opened in the period, at Bielefeld and Stuttgart, Germany, Charlton and Staines in the UK, Loulé in the Algarve, Portugal and Le Havre in France.
In the UK, ABF said that Primark is performing ‘very well, with sales 8% up on last year and a ‘strong increase’ in the group’s share of the total clothing market. Its performance was driven by a 4% growth in like-for-like sales, as well as an increase in range and selling space.
The group’s US business, meanwhile ‘continues to make progress’, according to the company.
Divisional Performance
In its Grocery division, ABF said that revenue in the first half is 'expected to be ahead of last year' at constant currency levels, while profits will be 'well ahead' of the same period last year, driven by Twinings Ovaltine.
It said that Ovaltine performed particularly strongly in Switzerland, Germany, South Asia, Nigeria and Brazil, supported by new product launches, while Twinings Tea made ‘good progress’ in the US.
At it's AB Sugar arm, meanwhile, revenue and profit is expected to be down on last year, in line with previous guidance from the company.
This is 'primarily as a result of significantly lower EU prices which are adversely affecting our UK and Spanish businesses', ABF said.
Overall Outlook
In terms of the overall trading outlook, ABF noted that 'for the half year, other than the expected reduction in Sugar revenues, sales growth will be delivered by all of our businesses at constant currency.
'We expect adjusted operating profit to be in line with that for the same period last year, and a lower net financial expense and lower group effective tax rate will lead to progress in adjusted earnings per share.'
Last week, the group announced Michael McLintock as its new chairman, replacing Charles Sinclair.
© 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.
