Investors will turn their focus to Primark owner Associated British Food’s (ABF) full year trading update on Tuesday to see if the budget fashion brand has continued to rack in hefty earnings for the firm.
The consumer goods giant, which also owns brands such as Twinings, has performed well in recent months, with retail like-for-like sales growing seven per cent in the three months to June due to “higher average selling prices” and inflation, as cash-strapped Brits tightened their belts.
During the term, the fast fashion brand, which has some 400 sites worldwide, reached sales of £1.99bn as it worked on improving its website for customers in mainland Europe and the US and continued to trial click-and-collect services.
In recent years, Primark has dominated the high street as its cheap clothes and homeware items prove popular with consumers on a budget.
Unlike its competitors, the brand has never provided home delivery services, but has recently begun rolling out more click and collect trials, meaning customers can order clothes online and pick them up in store.
Primark initially only offered the service on nursery goods, but said from this week onwards customers across 57 stores in London and the north west of England and north Wales will be able to buy a selection of womenswear online for collection in their local store.
Shares in ABF are up by around 30 per cent over the past year.
“This has been fuelled by a rally in the pound from last autumn’s lows, a fall in sea freight costs and improved consumer sentiment, as all three have fed into improved trading at both the food and ritual arms,” Russ Mould, investment director at AJ Bell, said.
“In a marked contrast to 2022, when a September trading alert drove the shares to a five-year low, AB Foods has upgraded expectations during 2023, most notably alongside June’s third-quarter trading update. The ongoing £500m share buyback may also be helping (AB Foods had spent £319m of that by the end of June).”
He added: “Analysts and shareholders will look for any comment on the extended click-and-collect trial across stores in the UK, as Primark dips its toe into online retailing and invests in its website, although physical stores remain the focus and new openings continue to be due across the estate, with a focus on Italy, France, Spain, Eastern Europe and particularly the US.”