10th Dec 2021 14:15
(Alliance News) - Shares in Associated British Foods PLC were higher on Friday despite a mask-wearing mandate being reimposed on the UK high-street, on which its Primark retail chain largely dependent.
Shares in AB Foods were up 0.8% at 1,948.50 pence in London on Friday. By comparison, Next PLC was down 0.7% and Frasers Group down 0.5%.
Face coverings have been mandatory in shops in England since Tuesday last week, potentially putting off shoppers during the key Christmas trading period. The Plan B measures, which have since been expanded to cover theatres and other venues, will be reviewed on January 5, before their expiry date of January 26.
AB Foods was out-performing peers on Friday after telling its annual general meeting that trading across its operations has been in line with expectations, despite the spectre of supply chain disruptions and increasing costs.
Fast-fashion retailer Primark has traded ahead of expectations in the new financial year to date, with improved like-for-like sales compared to the fourth quarter of the previous year, which ended September 18. The company added that Primark's margin for the year-to-date has also been ahead of expectations.
"We are managing disruption in our supply chain by prioritising products most in demand with the support of our logistics providers for whom we are a very important customer. We have stock cover on the vast majority of lines for the important Christmas trading period," Chair Michael McLintock told the AGM.
Meanwhile, McLintock said, trading in the Grocery, Sugar, Ingredients and Agriculture divisions has been in line with expectations.
Looking ahead, AB Foods said that it expects Primark sales to be significantly better than sales in the comparable period of December 2020 to April 2021 when stores were largely closed.
Public health measures related to Covid-19 have hurt Primark outside the UK as well. AB Foods said that to-date it has been experiencing restrictions in trading hours in the Netherlands, the requirement for vaccine passes in Germany, and the closure of five stores in Austria.
Despite this, since the year-end AB Foods has opened two new Primark stores - one in Vigo, Spain, and one in Catania, Italy - bringing its estate to a total of 400 stores.
AB Foods said it expects significant progress at its half-year and full-year results in adjusted operating profit and adjusted earning per share. For financial 2021, the company reported an adjusted operating profit of GBP1.01 billion and adjusted EPS of 80.1p.
Commenting on the AGM statement, brokers Davy liked the "constructive tone".
"We see upside risk to our forecasts, assuming a normalized trading environment for the remainder of the year. Contrary to current equity implied expectations, we believe in the franchise value of Primark and reiterate our 'Outperform' rating on the stock."
By Heather Rydings; [email protected]; and Tom Waite; [email protected]
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