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Primark owner Associated British Foods (ABF) has announced that it is raising its full-year guidance after Primark traded unexpectedly well.
The company stated that its adjusted operating profit and adjusted earnings per share were now expected to be broadly in line with the previous financial year.
Total sales at Primark are expected to be £4.2bn, 19% ahead of the same period last year at actual exchange rates and 16% ahead at constant currency.
It now expects Primark’s full-year adjusted operating profit margin to be above 8% with total sales to be 16% ahead of the same period last year driven by like-for-like sales 10% ahead.
However, ABF cautioned against a drop in consumer spending as a result of the cost of living crisis and inflationary pressure continuing.
The company also stated that last year sales were disrupted by the consumer reaction to Omicron from December, which resulted in a reduction in footfall, and store closures for a period in the Netherlands and Austria.
ABF said in a statement: “Looking ahead to the second half, we remain cautious about the resilience of consumer discretionary spending in the face of continuing inflation in the cost of living and higher interest rates. Our expectation is that like-for-like sales growth in the second half will be lower than that achieved in the first half but, based on our experience to date, will be better than our previous expectation.
“As a consequence, sales densities will improve compared to the same period in the prior year. Sea freight costs have returned to more normal levels and energy costs are much reduced recently. However, the cost of bought-in goods will be higher due to the strength of the US dollar against sterling and the euro and higher wage costs are expected.”
