Pre-Christmas squeeze for Primark
Primark owner Associated British Foods (ABF) has warned of challenging trading at the budget retail chain in the vital Christmas run-up.
The group said November had been “tough”, but stuck to its expectation for an increase in profits at Primark as a result of careful inventory management and improved margins.
Retailers had been hoping for some festive cheer over the critical Christmas trading period, the high street’s busiest time of year by a distance, following a difficult 2018.
ABF chairman Michael McLintock said Primark’s expansion will continue, with a new Belfast store opening this weekend to replace a flagship store ravaged by fire in August.
Last month, ABF reported a 2.1% likefor-like sales fall at Primark in the year to September as bad weather hit trading.
In its grocery business, ABF said it expected profits to improve as margins in its Australian and UK units rose.
However, it warned returns from its sugar unit will be “significantly lower” on the back of higher prices in the EU.
Mr McLintock said: “Taking all of these factors into account, at this early stage, we still expect adjusted earnings per share for the group for this financial year to be in line with the 2018 financial year.”
Shares closed down 108p at 2,242p following the update.
Meanwhile, fantasy miniatures maker Games Workshop pencilled in a healthy rise in first-half sales and profits.
The FTSE 250 constituent said trading had continued in line with expectations in the six months to December 2, with sales set to come in 13% higher at £124 million.
Operating profit is set to nudge up from £38.8m to £41m.
The results were helped by the continued popularity of tabletop game Warhammer.
“We have built on the progress we made last year and the results are considerable given the backdrop of major projects, increasing factory capacity and enterprise resource planning system implementation,” the firm said.
Shares in the group came under pressure in October after the company warned over uncertain trading.
However, yesterday’s positive update gave investors renewed confidence and the manufacturer’s stock closed trading up 130p at 2,995p last night.
Trading has been challenging for Primark, according to owner ABF.