The owner of Primark – Associated British Foods (AB Foods) – forecast “significant growth” in full-year profit after reporting a 39% jump in the first half.
The jump was driven by an improved performance in its Primark fashion retail stores.
The company’s shares were up 7% up in early trading. It had previously forecast “meaningful progress” in its full-year profit.
AB Foods, which also owns major sugar, grocery, agriculture and ingredients business, said adjusting operating profit – its key profit measure – was £951 million in the six months to 2 March.
This represented a 2% climb in revenue to £9.73 billion.
‘Ahead Of Expectations’
In a statement, the company said, “The group has delivered a strong first half performance and is on track to deliver significant growth in both profitability and cash generation ahead of expectations at the start of this financial year.”
Primark’s first-half revenue rose 7.5% to £4.5 billion, with like-for-like sales up 2.1%.
It logged an operating profit margin of 11.3%, up from 8.3%.
This was driven in part by improvements in the costs of the products it buys.
The group said Primark would roll out its click and collect service more broadly in the UK following a successful trial.
It added, however, that it will not be expanding to home delivery.
“We’re not a retailer that does home delivery,” the chief executive of AB Foods George Weston told Reuters.
He added that Primark was about “providing great value, but on the high street.”
‘Continue To Perform Well’
The group added, “We expect Primark to continue to perform well in the second half driven by our store expansion programme and the modest levels of like-for-like growth as we focus on driving volumes.”
It cautioned that the consumer environment “remains soft.”
It forecast “moderate improvement” in Primark’s operating profit margin in the second half compared to the first.
The group also expects its grocery business, which includes products such as Twinings tea and Kingsmill bread, to continue to perform well in the second half.
It forecast “substantial improvement” in the profitability of its sugar business.
