Parent company Associated British Foods (OTC: ASBFY) said on Tuesday that clothing store Primark did better than expected over the Christmas quarter but warned that economic headwinds may slow consumer spending in 2023.
The group said that Primark’s sales were 3.15 billion pounds ($3.91 billion) in the 16 weeks leading up to January 7. This was an increase of 15% in terms of constant currency, as “very strong” sales in the weeks before Christmas helped the company.
Official UK data from last week showed that inflation-stricken shoppers cut their spending on goods in December by the most in at least 25 years. However, some retailers, especially those at the value end of the market, did better than expected.
AB Foods (LON:ABF) said that consumer spending was stronger than expected in the third quarter of its financial year.
“So far, Primark’s sales have been good in all of our markets and better than expected,” the report said.
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“Trading has been good so far in this new calendar year, but there are still big problems in the economy that could slow down consumer spending in the coming months.”
Primark said in September 2018 that it would stop raising prices in 2022 and 2023 beyond what was already planned. The company wanted to maintain its reputation as a good value among customers.
AB Foods, which also has big businesses in sugar, groceries, agriculture, and ingredients, said that its total sales for the 16 weeks were up 16% to 6.7 billion pounds.
The group’s shares have gone down 8% in the last year but are up 18% in the last month. It has kept its forecast that sales will grow “significantly” in 2022–23, but the adjusted operating profit will be less than the 1.44 billion pounds it made in 2021–22.
It said that there were still a lot of cost pressures, but inflation was less volatile and some commodity prices had gone down recently.
Over the 16 weeks, sales in the group’s grocery business, which sells things like Twinings tea, Jordans cereal, and Ovaltine drinks, went up 9% to 1.39 billion pounds.
Due to a much smaller UK sugar crop, the group said they now expect AB Sugar’s full-year operating result to be about the same as last year.
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