Shares in Associated British Foods (LONN:ABF) have dipped more than two percent in London this morning, as the company revealed that its like-for-like sales at Primark had been held back by declines in Germany and the Netherlands in the 16 weeks to January 7. The group’s revenue, however, spiked during the reported period, getting a boost from a weaker pound.
As of 10:02 GMT, AB Foods’ share price had fallen 2.82 percent to 2,622.00p, underperforming the broader London market, with the benchmark FTSE 100 index currently 0.23 percent worse off at 7,273.76 points. The group’s shares have lost more than 13 percent of their value over the past year, as compared with an over 23-percent rise in the Footsie.
AB Foods announced in a statement this morning that its revenue from continuing operations had climbed 10 percent in the 16 weeks to January 7 at constant currency, and 22 percent at actual exchange rates, with the group benefitting from the drop in the pound. The company, however, also unveiled that while sales at Primark had surged 22 percent at actual rates, like-for-like sales were held back by declines in Germany and the Netherlands, the latter particularly affected by the rapid increase in selling space.
“The lack of return to like-for-like growth at Primark in Q1 will disappoint, even if largely linked to Europe self cannibalisation,” analysts at Jefferies said in a note, as quoted by Reuters. Liberum, however, has been more upbeat, flagging a solid 2017 for the FTSE 100 company.
“In 2017 we expect a strong rebound in group profits as sugar profits recover and Primark continues a strong store roll-out program,” the broker’s analyst Robert Waldschmidt commented, as quoted by Proactive Investors, adding that AB Foods “offers compelling exposure to secular growth trends in retail over the next five to ten years”.