Associated British Foods PLC (ABF.LN) expects good underlying growth in fiscal 2017 as a result of a stronger profit performance from its fast-fashion chain Primark, with an added currency boost from the Brexit-weakened pound.
The food, ingredients and retail company said Monday that since the third quarter of the fiscal 2017 trading period, it has experienced an even lower level of markdown which has further improved its full year outlook.
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As a result, AB Foods expects results for the 52 weeks to Sept. 16, to show an adjusted operating profit for the group well ahead of last year. The company also expects to report good growth in group's adjusted earnings per share.
Sales at Primark for the full year are expected to be 13% ahead of last year at constant currency and on a comparable week basis, driven by increased retail selling space and 1% growth in like-for-like sales, it said. On the same comparable basis but at actual exchange rates, sales are expected to be 20% ahead.
Favorable weather in the fourth quarter and the strength of the company's consumer offering resulted in markdowns at lower levels than normal, it said, adding that early trading of the new autumn-winter range has been encouraging.
Also, AB Foods said it has benefited from the pound's weakness against major currencies as the U.K. prepares to exit the European Union.
"With some two thirds of the group's operating profit earned outside the U.K., this devaluation will result in a translation benefit of some 85 million pounds ($109.7 million) this financial year, most of which arose in the first three quarters.
"Next year we would expect no material translation benefit at current exchange rates," AB Foods said.
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(END) Dow Jones Newswires
September 11, 2017 02:46 ET (06:46 GMT)