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(Alliance News) - Associated British Foods PLC on Tuesday raised its profit forecast for the 2021 financial year, after better-than-expected sales at Primark as stores reopened following lockdown.
Revenue at the fast-fashion chain reached GBP1.6 billion in the third quarter ended June 19, the company said That's up from GBP600 million in the same period last year, when stores were closed for most of the quarter, and a 3% like-for-like increase over the same period in 2019.
Shares were up 5.0% to 2,326.00 pence in London on Thursday morning, making AB Foods the top performer in the FTSE 100 index.
Primark sales beat the company's expectations and the performance was "much improved" on earlier periods in the pandemic, reflecting an increase in consumer confidence and willingness to spend, AB Foods said.
Richard Hunter, head of markets at Interactive Investor, said: "There was an element of pent-up demand following the reopening of stores, but even here the level of demand was significantly stronger than had been seen in previous lockdown easings. Increased basket sizes and lower levels of markdown also added to the stellar performance."
Total third-quarter sales for AB Foods were up 47% year-on-year on a constant currency basis, to GBP3.65 billion. There was strong sales growth at the sugar and agriculture units, while grocery sales declined. Net cash more than doubled during the quarter, to GBP1.45 billion from GBP705 million.
In the year-to-date, total revenue is down 2% year-on-year to GBP9.96 billion.
Adjusted operating profit in the 2021 financial year is now expected to be broadly in line with financial 2020, when the company made GBP1.02 billion, AB Foods said. The London-based company had said in February that profit would fall.
By Ivan Edwards; ivanedwards@alliancenews.com
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