Primark's market share touched a record high of 7.1% in December, despite early challenges due to an unusually warm winter.
ADVERTISEMENTAssociated British Foods (ABF), the owner of retail-chain Primark, has issued a buoyant trading update for the 16 weeks up to 6 January.
The group's grocery arm clocked in a revenue of £1,414 million (€1654) for the period, with ingredients coming in at £698 million (€816). Revenue from agriculture for the same 16 weeks raked in £572 million (€669 million) while sugar added its own sweetness to the figures with a revenue of £825 million (€965 million). Retail, however, surpassed all the other departments by taking a whopping £3,376 million (€3948 million) in revenue.
Primark and Ingredients drive revenues
The group's US-focused brands performed exceptionally well, along with international brands, such as Twinings. Although Ovaltine did reasonably well in western Europe, some hurdles were seen in Asia.
AB Mauri, ABF's yeast and bakery ingredients business, also saw good profit and sales advances. However, customer destocking hit other parts of the Ingredients arm. Agriculture sales remained mostly lacklustre.
Currency and production obstacles to hamper the group's southern African sugar arm, Illovo. Vivergo, ABF's biofuels company also saw mixed results during the period. However, overall sugar production was still expected to be considerably above last year, even in the face of adverse weather, the company said.
Primark saw sales inching up 7.9% in the 16 weeks, with the retail chain increasing its market share to a new high of 7.1% in the 12 weeks leading up to 10 December. This was 0.1% more than 2022, despite warmer weather this winter and a delayed start to Christmas sales.
Menswear and womenswear, as well as leisure, performance wear and the Rita Ora collection did significantly well, although cold weather categories saw a delayed start, for which they made up as winter progressed.
Total UK Primark sales for the 16 weeks grew 4.5%, whereas Europe Primark sales, excluding the UK, inched up 9.1%. However, economic conditions in certain European countries affected local performance. US sales were up 45%, as a number of new stores opened.
Primark also continued to expand during this period, with three new stores in the US, one in Poland, three in France and one in Spain.
ABF reasonably confident regarding profitability for the next year
Regarding the Red Sea crisis, ABF's trading statement highlighted: "We continue to monitor the situation in the Red Sea but at this stage we do not expect any significant disruption to our supply chain."
Looking ahead, ABF said: "We continue to look forward to a year of meaningful progress in both profitability and cash generation, with the profitability improvement being driven by a recovery in Primark margin, a marked improvement in British Sugar profitability, and by reduced losses at Vivergo.
"We also feel more confident in the delivery of the Primark adjusted operating margin in this financial year, driven by a further improvement in product gross margin. This should insulate us well against potential additional costs of supply due to the disruption in the Red Sea, should they arise."
