Q1 revenue +4% yoy, reflecting overall sales growth from both Primark and the sugar business.
Not even Primark’s UK business has been able to outsmart estimated weaker footfall numbers on the UK high Street this Christmas period. Primark’s UK businesses saw like for like sales fall marginally over the Christmas period. However, the fall was much less than that of rivals, meaning Primark grabbed a larger share of the UK clothing market. Thanks to new space overall sales were 4.5% ahead of last year.
Primark Abroad
European sales have been a highlight. Eurozone Primark saw sales jump 5.1% coupled with like for like growth. US Primark also recorded like for like sales growth in the quarter.
Overseas is proving to be a strong point for Primark. Given Primark’s lack of online presence, the overseas business is compensating for the tough conditions of the UK market.
Sugar Rush
Strong growth was also experienced at AB Sugar as EU sugar prices remained healthy. Revenue jumped 7%, which combined with cost reductions means full year profits are set to improve.
Outlook
Overall there was a lot to like in these results. Primark continues to perform well compared to rivals despite challenging conditions, amid weak consumer confidence and low retail sales in the sector, and despite the fact that the business has no online presence. Whilst a sugar rush from AB Sugar helped push AB Foods (LON:ABF) to the top of the FTSE.
Looking ahead, the outlook for the UK consumer still looks shaky, despite the firmer political landscape following December’s elections. UK GDP contracted -0.3% in November, raising fears that the UK could be heading towards a recession early next year. Should consumer confidence dip further, Primark could become more reliant on its overseas operations.
Chart thoughts
Associated British Foods (LON:ABF) share price has jumped 3% in early trade on Thursday. It trades firmly above the 50, 100 and 200 sma on a bullish chart.
Resistance can be seen at 2680p (Jan10 high) before the all time high of 2704p (7th Jan). Immediate support can be found on the trendline in the region of 2575p and then yesterday’s low 2547p.
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