Primark owner upgrades profit outlook as shoppers seek holiday outfits

theguardian.com:

The owner of Primark and food brands including Twinings has upgraded its profit forecast for this year as revenues jumped thanks to inflation-fuelled price increases and as shoppers bought summer clothes.

Associated British Foods (AFB), which also owns Ovaltine as well as a sugar business, said group sales rose by 16% to £4.7bn in the three months to 27 May. Sales at Primark were up 13% to nearly £2bn.

The cut-price clothing retailer said sales growth at Primark was “supported by higher average selling prices”, as retailers continued to push through price rises amid increases in production and supply chain costs.

“As well as seasonal clothing and accessories, sales in health and beauty products were particularly strong,” the company said.

ABF said it expected full-year adjusted operating profits to be “moderately ahead” of last year, having previously guided they would be “broadly in line” with the £1.4bn made in the previous year.

ABF added that its food business continued to perform strongly with sales in its grocery business up by 13% to £1.05bn, while its ingredients operation rose 10% to £547m.

“We have seen strong, constant currency sales growth in grocery and ingredients largely driven by the necessary pricing actions taken earlier in the year to offset input cost increases,” the company said.

Last week, the Bank of England increased interest rates by a half point to 5% as part of its efforts to tackle high inflation.

Prices remain high and are still rising fast, adding to pressure on struggling households. Between April and May, food and drink inflation slowed from 19% to 18.3%, still among the fastest rates in decades.

ABF said its sugar business, which reported a 51% year-on-year rise in quarterly sales to £665m, was