Primark owner upgrades profit outlook as inflation fuels jump in sales revenue | Associated British Foods

The owner of Primark and food brands including Twinings has upgraded its profit forecast for this year as sales revenue jumped thanks to inflation-fuelled price increases and as shoppers bought summer clothes.

Associated British Foods, which also owns brands including Ovaltine as well as a sugar business, said that group sales rose by 16% to £4.7bn in the three months to 27 May. Sales at Primark were up by 13% to nearly £2bn.

The cut-price clothing retailer said that sales growth at Primark was “supported by higher average selling prices”, as retailers continue to push through price rises amid rises in production and supply chain costs.

“As well as seasonal clothing and accessories, sales in health and beauty products were particularly strong,” the company said. “Sales in our flagship city centre stores have continued to be good.”

ABF said it now expects full-year adjusted operating profits to be “moderately ahead” of last year, having previously guided they would be “broadly in line” with the £1.4bn made in the previous year.

ABF said that its food business continues to perform strongly with sales in its grocery business up by 13% to £1.05bn, while its ingredients operation rose by 10% to £547m.

“We have seen strong, constant currency sales growth in grocery and ingredients largely driven by the necessary pricing actions taken earlier in the year to offset input cost increases,” the company said.

Prices remain high and are still rising fast, adding to pressure on struggling households. Between April and May food and drink inflation slowed from 19% to 18.3%, still among the fastest rates in decades.

ABF said that its sugar business, which reported a 51% year-on-year rise in quarterly sales to £665m, is “progressing well” in the UK after it was forced to secure alternative sources of supply due to a production shortfall.