Primark expects higher profits as people shop early for summer

theguardian.com:

The owner of the clothing retailer Primark said annual profits will be higher than previously expected after Britons started shopping early for the summer and as inflation eases.

Associated British Foods (ABF) said people were planning for their holidays despite the cost of living crisis, with strong sales of luggage and beachwear.

“We believe our proposition of great quality at affordable prices and attractive store experience is proving increasingly appealing to both existing and new customers,” the group said. “Early reaction to our spring and summer ranges has been very positive.”

John Bason, ABF’s finance director, told Reuters: “People are planning or have planned their holidays for this year. Last year we were talking about people really wanting the holiday that they had not had during lockdown. Well it seems to me they certainly want another one this year.”

ABF expects group sales to rise 20% for the six months to early March compared with last year, helped by a 19% increase in sales at Primark, according to a trading update on Monday. The company now expects profits annual profits to be roughly in line with last year’s. It had previously expected profits to be lower on fears that Primark trading would be hit a weaker consumer backdrop.

The company, whose products range from Twinings tea to animal feed and clothing, has previously warned that much higher prices of energy and commodities like cotton would weigh on its profits and could cause a downturn in consumer spending. However, it reported stronger-than-expected trading at Primark at Christmas, helped by sales of heels, baggy suits and knitwear, and said on Monday that some of the pressures had eased.

“Inflation has become less volatile and recently some commodity