PART OF THE WEEK: All eyes are on Primark’s results
With Marks & Spencer seemingly getting its mojo back, Primark’s owner will reveal how the company is faring when he delivers his latest update next week.
Associated British Foods, which owns numerous brands such as Silver Spoon, Ryvita, Kingsmill and Twinings as well as fashion chain High Street, has seen its shares rise 25 percent this year and have risen almost 60 percent since lows in September last year .
Investors are therefore hoping for further upswing when the full-year trade balance is published on Tuesday.
After upgrading its outlook at its third quarter update in June, City analysts forecast annual profits of £1.47 billion, up slightly from the £1.4 billion a year ago.
Sales are said to have increased by 17 percent to 19.9 billion pounds.
But according to Russ Mold of investment platform AJ Bell, “any forecast for the financial year to September 2024 is likely to be even more important.” Profits are expected to rise to £1.65 billion next year and sales to rise to £20.8 billion.
As always, Primark is likely to get most of the attention and its first half trading was better than many thought as shoppers continued to buy heavily. However, customers, analysts and investors alike will be keen to see how far Primark plans to raise prices to protect margins as the costs of doing business soar.
“Management doesn’t want to push prices too far,” Mold said.
There will also be interest in the high street retailer’s move to click-and-collect as it enters the world of online retail.
However, the stores remain the be-all and end-all, and the chain is expanding across Europe and the United States.
Aarin Chiekrie, equity analyst at investment platform Hargreaves Lansdown, says cash flow will also be key as it is “likely to have a direct impact on the group’s ability to fund future dividends and share buybacks”.
“There is no guarantee of shareholder returns,” he adds.