Associated British Foods’ update from today is very good under the circumstances with food, ingredients and agriculture sales and profits ahead of expectations and the Primark retail division showing remarkable resilience for the periods when its shops were open.
“While Associated British Foods has stood out like a sore thumb in the retail sector for refusing to sell its clothes online due to concerns about the economics, one cannot fault the business for also sticking to its guns and maintaining a conglomerate status when so many people said there were merits to spinning off Primark,” said AJ Bell’s Russ Mould.
“During the pandemic it has enjoyed diverse sources of revenue which have helped prop up the business when one part has been struck by significant operating challenges.
“The important point to note in its latest update and in previous ones is that consumers are quick to return to Primark shops as soon as lockdown measures are lifted.
“More than four fifths of its retail selling space should be trading by late April, meaning the company must only get through two more difficult months before it can start to bring Primark back to full health.
“Even though lots of people have been buying clothes online during the pandemic, it is fair to suggest that there is still pent-up demand for going into shops to touch and feel items. In Primark’s case, it could easily see a big rush of customers looking to restock their wardrobes with cheap items, particularly if they’ve put on a few pounds snacking during lockdown and they need to go up a size.”
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