How’s this for outperformance? Revenues at Associated British Foods were up 21 per cent in the 16 weeks to January 3rd, up 15 per cent at constant exchange rates.
The UK-listed food producer, which also owns discount retailer Primark, saw its sugar and grocery businesses benefit from weakness in sterling in particular.
However, as always, what’s really interesting is the performance in Primark – where sales rose 18 per cent in the period. It seems that no-end of bad press – like that linking the group to sweat-shop manufacturing and such the like – can dissuade the great British public from loading up on bargain fashion items, often for less that £10 a pop.
As the group explains, it’s now exporting the model successfully to other distressed European economies. Among them Spain – home to the original bargain ‘but still fashionable’ retail-model spawned by Inditex (Zara back at you!):
Trading at Primark was strong and over Christmas was ahead of our expectations. Sales were 18% ahead of last year reflecting the increase in retail selling space and very good like-for-like sales growth. At 3 January 2009 there were 187 stores with 5.6 million sq ft of selling space. Since last year end we have opened six new stores: Oviedo, La Coruna and La Gavia (Madrid), bringing the number of stores in Spain to 12, High Wycombe and Corby in the UK and our first store in the Netherlands, in Rotterdam. Initial trading in Rotterdam has been very encouraging. As expected, fixed overheads have increased by the cost of the new distribution centre at Thrapston in the UK which has been operational during this period
All that positivity aside, however, it seems even ABF are cautious about 2009, seeing themselves as not ‘immune’ to the worsening economic climate and particularly the pressure on consumer spending:
We have budgeted for little change in net earnings for the full year and still anticipate results in line with that expectation.
Associated British Foods was up just over 1 per cent in early London trade following the numbers. Here’s the one-year performance of ABF, Inditex and the FTSE:
Related links:
Recession at Tiffany’s – FT Alphaville
Highstreet crunchiness – FT Alphaville