FTSE 100: ABF to open 17 new Primark stores after bumper Christmas sales
Associated British Foods (ABF.L) is to open 17 new Primark stores after posting strong Christmas sales in its latest trading update.
The London-headquartered group said it was on track to add 1 million square foot of retail selling space in this financial year, equating to 17 new stores set for opening in different parts of the world.
New store openings include the first store in Slovakia and the first in Hungary. At least seven new stores are planned for the US, but none for the UK.
Amid the cost of living crisis, the budget fashion retailer has attracted consumers mindful for a bargain and sales at Primark increased by 15% in the 16 weeks to 7 January 2023.
This helped push Primark's share of the UK’s clothing and footwear market from 6.5% to 7%.
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On Tuesday, the company said: "To date, Primark trading has been good in all our markets and was ahead of expectation.
"We had a very strong Christmas period. We believe our proposition of great quality at affordable prices and attractive store experience is proving increasingly appealing to both existing and new customers.
"Early trading in this new calendar year has been encouraging but macro-economic headwinds remain and may weigh on consumer spending in the months ahead.
"We had an accelerated programme of store openings in the period and remain on track to add a net 1 million sq ft of retail selling space in this financial year."
Primark owner ABF said it had increased its revenue in multiple sectors.
The firm's sugar and ingredients sectors saw revenue rises of 27% and 26% respectively over the trading period.
The world's second-largest producer of both sugar and baker's yeast saw its overall revenue rise to £6.698bn, 20% higher than the same period last year.
ABF shares rose 2.35% to 1,869p on Tuesday, up 43p in the past 24 hours.
Speaking about ABF's trading update and the Primark's increased sales, Richard Hunter Head of Markets at interactive investor said: “The group’s diversity continues to play its part, while Primark is back with a bang given changing shopping habits.
"As seen with so many other retailers, especially over the Christmas period, there has been a marked return to physical shopping, to some extent at the expense of the higher online levels seen during the pandemic.
"This particular development plays especially into the hands of Primark, where its online offering remains at a nascent stage. Although there is a trial of a Click and Collect process and a significant in views on its site from a low base, the further rollout to countries outside of the UK is unlikely to drive major growth for the time being.
"For Primark, changing shopping habits are something of a blessing. Apart from what had been an increasing trend towards the return to shopping in high streets and retail parks, major city centres have now joined the party and, coupled with a surprisingly resilient consumer, trading over the period was strong and during Christmas in particular.
"The Primark business currently accounts for 47% of total group sales, much in line with pre-pandemic levels, and an increase of 15% for this update is proof positive that the group’s discount offering is capturing the zeitgeist of a cash conscious consumer."