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Associated British Foods sticks to guidance

by LLB Reporter
9th Dec 22 10:00 am

Amid the current consumer turmoil, for a retailer to stick to its guidance is an achievement in itself. Primark-owner Associated British Foods’ in-line trading update will provide a healthy dose of reassurance to its shareholders – even coming, as it does, just weeks after full year results.

AJ Bell’s Russ Mould said: “While inflationary pressures remain the simple fact that input costs have become less volatile gives investors more visibility and also makes it lot easier for the business to plan for the future.

“The company’s conglomerate structure has been a strength in 2022 as the food and ingredients business has proved resilient and that continues to be the case.

“Primark is off to a strong start to the current financial year and the continued roll-out of stores is a show of confidence that the budget chain’s offering will resonate with shoppers in a difficult economic environment. It is notable the extent to which Primark is prepared to take some pain on margins to retain its bargain credentials.

“There’s no mention of the success or otherwise of Primark’s new click and collect trial as it finally dips its toe in the e-commerce waters.

“There remains resistance to the idea of going fully online and offering a delivery service – Primark relies on people making impulse purchases once they are through the doors – so click and collect makes sense as an initial step to having a meaningful online presence.”

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