Penneys-Primark owner projects higher profits and sales amid inflation

Owner Associated British Foods said it was still 'cautious about the resilience of consumer discretionary spending in the face of continuing inflation in the cost of living and higher interest rates'

Penneys-Primark, which has its retail head offices in Ireland, had already said it would limit further price increases.

The owner of Penneys-Primark stores said it expected profits and sales to increase for its full financial year, as the clothes retailer manages inflation running at its highest levels for decades.      

Penneys-Primark, which has its retail head offices in Ireland, had already said it would limit further price increases. And in the latest update, its owner Associated British Foods, or ABF, sees the retail business performing, though it was still "cautious about the resilience of consumer discretionary spending in the face of continuing inflation in the cost of living and higher interest rates". 

"At Primark, we now expect an improvement to our previous expectations of adjusted operating profit in the second half as a result of higher sales and some lower operating costs. For the full year, we now expect adjusted operating profit margin to be above 8%," ABF said.  

Shares in ABF, which were up almost 1.5% in the latest session, have now increased significantly since the start of the year.        

"Primark traded very well for the half year, total sales are expected to be £4.2bn [€4.7m], 19% ahead of the same period last year at actual exchange rates and 16% ahead at constant currency. Adjusted operating profit margin for the half year is now expected to be above 8%," it said.  

ABF also owns a wide range of other businesses, including grocery, sugar, and agriculture products.

Its grocery operations include Twinings, Jordans cereals, Kingsmill, and Ovaltine, for which ABF projects profits for the full financial year will be "slightly lower than last year with inflation in input costs continuing to run ahead of pricing and cost mitigation activity".