Conglomerate Associated British Foods (ABF) posted a disappointing Christmas trading statement and warned profits would be down this year.
The food business had a ‘mixed’ – which is code for poor – first quarter with grocery and ingredients sales down and the firm taking a ‘cautious’ full year outlook.
Primark also had a ‘challenging’ quarter with sales growth of just 3%, below expectations, in ‘a difficult clothing market, particularly over Christmas’.
As a result, group sales are expected to be flat this year while operating profit and adjusted earnings per share will be down on last year.
| Price: £19.20 -10.7% | P/E: 13x |
| Market Cap: £13.5bn | Yield: 2.9% |
There will be a lot of glum faces around the City today after the combination of what amounts to a profit warning from ABF and uninspiring Christmas updates from Marks & Spencer (MKS) and Tesco (TSCO).
For a moment it seemed as though Primark in particular had struck gold with its expansion overseas and its long-overdue expansion online with Click & Collect.
But fashion retail is a notoriously fickle business, and when it comes to the UK no-one does it better than Next (NXT) which is why it’s valued twice as highly as ABF.
Read the press release here: https://www.abf.co.uk/investors/
Read related news here: https://sharesify.com/next-sales-beat-forecasts-after-bumper-christmas/
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