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* Primark's sales up 36% yr/yr in 16 weeks to Jan. 8
* Sales down 5% on a two-year basis
* Expects boost to sales from lifting of COVID restrictions
* Pledges not to raise Primark prices
* To cut 400 Primark in-store management jobs
(Adds detail, finance chief comments, shares)
By James Davey
LONDON, Jan 20 (Reuters) - Associated British Foods
said on Thursday the lifting of COVID-19 restrictions in England
had boosted prospects for its Primark clothing business after
December sales were dented by the rapid spread of the Omicron
coronavirus variant.
The group said Omicron had interrupted an improving trend in
Primark's customer numbers but it was now seeing a recovery in
UK and Ireland footfall.
"In the UK and Ireland I think we're looking at an improving
consumer outlook," John Bason, AB Foods' finance chief, told
Reuters, pointing to falling COVID-19 infection rates and the
end of restrictions in England.
He said he expected Primark's city centre stores to get a
boost from workers returning to offices, while the business
would also benefit from more people planning holidays.
Bason also pledged that, unlike rivals such as Next,
Primark would not raise prices for spring/summer stock despite
inflationary cost pressures.
He said a plan to improve efficiency in Primark stores would
result in the loss of about 400 management jobs.
Shares in AB Foods were down 1.9% at 1017 GMT.
Primark trades from 401 stores in Europe and the United
States but does not have an online business.
Its sales for the 16 weeks to Jan. 8 were 2.67 billion
pounds ($3.64 billion). On a constant currency basis that was
36% ahead of last year when there were widespread closures of
its stores in the UK and Europe.
While sales were 5% lower than pre-COVID levels in the same
period two years ago, its operating profit margin was ahead of
management expectations.
All Primark stores remained open throughout the period,
except for short periods in Austria and the Netherlands, which
cost it 30 million pounds of sales.
AB Foods also owns major sugar, grocery, ingredients and
agricultural businesses, where revenue in aggregate was 6% ahead
of last year.
The group said all businesses had experienced inflationary
pressures in raw materials, commodities, supply chain and
energy. That has impacted margins in grocery and ingredients
where price rises have lagged the effects of input cost
inflation.
However, the group still maintained its guidance for
"significant progress", at both the half and full year, in
adjusted operating profit and adjusted earnings per share.
($1 = 0.7335 pounds)
(Reporting by James Davey Editing by Jason Neely and Mark
Potter)
