23rd Jan 2025 08:51
(Alliance News) - Associated British Foods PLC on Thursday pared its growth expectations for fast fashion retailer Primark after weak trading in the UK.
In response, shares in the London-based retailer and food maker were 1.2% lower at 1,913.50 pence each in London on Thursday morning. They are down 6.6% in the past month.
AB Foods said group sales fell 2.2% to GBP6.73 billion in the 16 weeks to January 4 from GBP6.89 billion a year prior. At constant currency, however, sales were up 0.5%.
All divisions posted declines in sales at actual currency rates. Sales in the Retail arm fell 0.4%, in Grocery by 1.8%, Ingredients by 1.6%, Sugar by 6.0% and Agriculture by 5.1%.
But at constant currency the picture was more mixed. Revenue in Retail grew 1.9%, Grocery rose 1.8%, Ingredients increased 3.5%, Sugar fell 2.1% and Agriculture declined 4.1%.
AB Foods said Primark is now targeting low-single digit sales growth in 2025 compared to previous guidance of a mid-single digit rise.
The company continues to expect Primark's adjusted operating profit margin to remain broadly in line with last year's level, as gross margins have continued to improve and cost management has offset inflation.
Primark's sales grew 2.0% overall but fell 4.0% in its largest region, the UK, which included a like-for-like sales decline of 6.0%.
UK sales account for around 45% of total Primark revenue.
AB Foods bemoaned "cautious consumer sentiment and a lack of seasonal purchasing catalyst given the mild autumn weather" in the UK.
The firm highlighted a "weak" October and November, followed by stronger sales and like-for-like growth in December over the key Christmas trading weeks.
In contrast, Primark saw good growth across key growth markets, Spain, Portugal, France, Italy, Central and Eastern Europe and the US.
Grocery revenue reflected good growth in international brand businesses driven by Twinings and Ovaltine. This was partially offset by declines in certain US and UK-focused brands, as expected.
Ingredients saw sales in the yeast and bakery ingredients business, AB Mauri, grow 4% led by good growth in Central and South American markets.
Sugar sales declined 2%, with good sales growth in Africa offset by a decline in European sales prices, as expected.
Agriculture revenue declined 4% as growth in the speciality feed and additives businesses, and a good performance in dairy was offset by soft sales in the compound feed businesses.
By Jeremy Cutler, Alliance News reporter
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