Primark Continues To Expand Its Promise And Not To Shift Costs To Consumers.

Associated British Foods PLC (ABF.L) Ying Lian food group (hereinafter referred to as "ABF") released today's performance update shows that high street parity retailers Primark still rely on store expansion to support sales growth, and management has warned that exchange rate fluctuations will damage the brand's earnings next year.

In view of the fact that Primark contributed more than half of the revenue and 60% profits to ABF, Associated British Foods PLC (ABF.L) fell 3.9% early on Monday.
ABF expects Primark to grow by 4% in the fiscal year ending September 14th, 3% and 5% respectively in the UK and the euro area. Over the past year, the brand has added 14 stores and a total sales area of nearly one million square feet. However, the sales of its own stores in the same store for a year or more have dropped by 2%, while the British market and the euro area have recorded a decline of 1% and 3% respectively.
Management said that although the retail environment was sluggish, Primark could still increase its market share in the local market, and the brand had strong performance in Spain, France, Italy and Belgium, and the German market was significantly weaker.
At the same time, ABF, which owns Twinings Chuan Ning, A Hua, Tian Tian and other brands, revealed in its performance update today that its business has completed all the substantive preparations for the various situations in the UK from Europe, and has also made contingency plans. However, it is estimated that the new low pound exchange rate after the British referendum dropped to three years ago and the strong US dollar in the current fiscal year will increase the product cost of Primark in the next fiscal year, which is expected to increase in.
John Bason, chief financial officer of ABF, stressed at the conference that Primark did not intend to shift the incremental cost to consumers. It also pointed out that the brand will continue to invest in high street and the UK, which is the difference between them and their competitors.
Primark purchases mainly in dollars in Asia, while the United Kingdom and the euro area account for the bulk of the brand's income. At present, the world's 373 Primark independent stores, the United States market accounts for only 9 stores, ABF expects Primark U.S. business loss will benefit from the same store sales growth, and three loss stores narrowed area narrowed sharply.
Primark plans to increase its sales area by 1 million square feet in the 2020 fiscal year beginning in mid September. The United States will add two new stores. The capital of Warsaw will also welcome Primark entry for the first time in Poland, which means that the brand will step into thirteenth markets.
Seeing that retailers in different fields, including Topshop parent Arcadia Group Ltd. and Debenhams PLC department store, have achieved the goal of closing stores and reducing rent with the help of the bankruptcy procedure CVA, Primark and the second largest clothing retailers, H&M, COS and &Other, have also been asked to reduce their rents to stores owners. In July, Primark admitted that it would be up to 30% for the owners to reduce the rent by renewing the contract or refurbishing the store.
The latest figures released by Springboard, a retail data company, show that over the past three months, the number of high street retailers in the UK has decreased by 3.1% compared with the same period last year. In August, the number of passenger and shopping centers in the street shops decreased by 1.9% and 2.2% respectively, and only 1% of the retail parks grew. Helen Dickinson, chief executive of the British Retail Association, points out that prudent British consumers curb independent spending and reduce the continued trend of patronizing stores.
Associated British Foods PLC (ABF.L) reported 2305 pence on Monday, down 2.1% from the whole world, narrowing the fall to 12.8% in 2019, and now it has a market value of about 18 billion 250 million pounds.