Sep 7, 2020

Primark full-year profits on course to top forecast

Full-year profits at Primark will be "At least at the top end" of the company's forecast £300m-£350m range amid a recovery in trading after stores reopened following weeks of lockdown measures. Parent company Associated British Foods said Primark would now need to carry over only about £150m worth of stock into next year and expected a "Significant reduction" in the exceptional charge of £284m previously booked against surplus inventory. "The average basket size was initially significantly higher than last year, reflecting some pent-up demand, and while this outperformance has reduced in recent weeks it remains higher than a year ago," the company said in a statement, though it added that transaction numbers had increased. In ABF's other businesses, the grocery division benefited from demand for flour and yeast, although this was partly mitigated by weak sales of Ovaltine, a malt extract drink popular in Asian markets, and the termination of a bread supply contract with Co-op in the UK. Sugar profits are expected to be well ahead as a result of improved EU pricing and better crop yields in China, while ingredients profits "Are now expected to be ahead of last year". The impact of Primark store closures during lockdown measures means that group net profit will be down significantly on last year's £876m. The chain had been on course to make more than £1bn in profit this year.

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