(Alliance News) - Associated British Foods PLC on Thursday said it has kept its outlook for its current financial year unchanged, as strong margins from fashion retailer Primark and overall sales growth more than offset input cost inflation.
Shares in the London-based retail group were down 1.9% at 2,090.00 pence on Thursday morning.
For the 16 weeks ended January 8, total sales grew 16% to GBP5.57 billion from GBP4.80 billion the same period a year before.
Nearly all of the group's segments delivered growth in the period, with its Retail arm - which houses low-cost clothing chain Primark - showing the highest rate with a 32% rise to GBP2.67 billion. This was due to a gradual improvement in footfall and the reopening of stores, which were mostly shut in the prior period.
However, like-for-like sales from the UK retail stores were down 10% from the same period in its 2020 financial year, while like-for-like sales in Continental Europe suffered a 14% drop over a two-year gap, as Omicron continues to hamper footfall.
Meanwhile, AB Foods noted that its Food segment was up 4.7% at GBP2.90 billion, with Ingredients, Sugar and Agriculture benefiting from higher sugar prices and volume recoveries, more than offsetting a 1% dip in Grocery.
Retail's operating profit margin was ahead of expectations and is expected to be over 10% at the half-year as inflationary pressures were broadly mitigated by a favourable US dollar exchange rate and a drop in store operating costs.
However, Grocery and Ingredients are expected to have reduced margins for the interim period, due to the phasing in the mitigation of pricing actions.
"All businesses have experienced inflationary pressures in raw materials, commodities, supply chain and energy. Margins in Grocery and Ingredients were impacted where sales price actions have lagged the effects of input cost inflation," said AB Foods.
Looking ahead, AB Foods has left its outlook unchanged, and continues to expect significant progress in adjusted operating profit for both the interim and annual period.
In addition, Primark said it is looking to simplify its UK store retail management structure and make it consistent across its estate of over 190 stores in the UK. While it is creating a new management level role as part of the move, it expects the changes to leave it with around 400 fewer retail managers.
"The changes we're proposing will deliver a simplified and more consistent management structure across all of our stores, provide more opportunities for career progression and offer greater flexibility, all of which are designed to help us provide the best possible experience for both our customers and our colleagues," said Kari Rodgers, Primark UK retail director.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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AB Foods (ABF)