AB Foods share price rallies as Primark owner reports rise in revenue

Shares in Associated British Foods (LON:ABF) have surged in London this morning as the Primark owner updated investors on its performance, reporting a rise in revenue for the 16 weeks to January 5. The blue-chip group further lefts its outlook for the full year unchanged.

As of 08:32 GMT, AB Foods’ share price had added 5.33 percent to 2,294.00p. The group’s shares are outperforming the broader UK market, with the benchmark FTSE 100 index having fallen into the red and currently standing 0.33 percent lower at 6,839.97 points.

AB Foods posts rise in revenue

AB Foods announced in a statement this morning that its revenue had climbed two percent in the 16 weeks to January 5, finding support in strong performance at Primark where sales rose four percent during the reported period. The company noted that sales growth at the fashion chain had been driven by increased retail selling space partially offset by a modest decline in like-for-like sales. The group’s Sugar division, however, revenue from continuing operations drop 14 percent at actual exchange rates.

AB Foods said that its outlook remained unchanged, with adjusted operating profit and adjusted earnings per share for the year expected to be in line with last year.

Analysts weigh in on Primark owner

“Two things about Primark – it doesn’t discount and prices are so low it doesn’t do online, so it avoids certain pitfalls and certain opportunities that other face,” said Neil Wilson of Markets.com, as quoted by Proactive Investors. “Ultimately the lack of an online offering will cap sales growth, but as long as it can maintain margins and be the go-to high street brand for affordable clothing it should be relatively okay.”

Shore Capital and Liberum both reaffirmed AB Foods as a ‘buy’ today. According to MarketBeat, the Primark owner currently has a consensus ‘buy’ rating and an average price target of 3,023.63p.

As of 09:18 GMT, Thursday, 17 January, Associated British Foods plc share price is 2,294.00p.