Primark trading statement shows tough November trading
today Dec 7, 2018
Annual general meetings are often dull events where decisions are rubber-stamped. But Associated British Foods chose to issue a Primark trading update at its AGM on Friday and it showed that even one of Britain’s most successful retail names isn’t immune to the retail downturn.
Chairman Michael McLintock said that “at this early stage in our new financial year, sales and profit for the first eight weeks of trading for the group were in line with expectations.”
However he added that “during November, Primark trading was challenging in a tough retail market, but with careful inventory management and improved margins, our expectation for the increase in Primark profit is unchanged.”
The report was annoyingly short on detail so we don’t know just what the problem was, although we assume it wasn’t the weather woes that hurt UK fashion retail in October as November has been suitably autumnal, even wintry in some parts of the UK. We also don’t know how much of a hit Primark trading took and exactly what the company had to do to support its profits target.
McLintock also said that Primark's selling space expansion will continue “and we expect an increase in retail profit for the year.”
The company certainly has plenty going on at the moment as far as growing its retail space is concerned and on Saturday will open a store in Belfast, a location were trading was hurt by the fire at its city centre store earlier this year.
The opening will see it trading from 364 stores and a total selling space of 15.1m sq ft.
At current exchange rates, the company is expecting “no material translation or transactional effect on profit but the sterling exchange rate can be expected to be volatile given a period of intense Brexit negotiations.”
Taking all of these factors into account, it still expects adjusted earnings per share for the group for this financial year to be in line with the 2018 financial year.
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