Associated British Foods and Whitbread have reported mixed results but both show signs of a post-COVID rebound.
Tuesday 25 April 2023 11:07, UK
Two of the UK’s biggest businesses have reported signs of a post-COVID bounce-back, despite wider economic pressures.
Primark owner Associated British Foods and Premier Inn owner Whitbread both reported financial results on Tuesday morning and, while they noted the ongoing economic pressure, they each had some good news.
ABF reported a 3% fall in first-half profit and said it was sticking with earlier guidance that the full-year outlook would be flat.
But it also said that Primark saw a 15% surge in sales in the six months to early March compared with the same period a year ago.
Primark’s sales, including its shops in Europe, rose to £4.2bn as more shoppers returned to high streets and retail parks, and more workers returned to city centres, ABF said.
The chain’s bargain offerings also attracted new customers, as people struggling with the cost of living crisis sought more affordable items.
But, like many businesses, ABF said it had to push up prices to offset some of the impact of cost inflation.
ABF chief executive George Weston said: “This period was marked by extreme and volatile inflation in all our businesses.
“We have taken considerable action to mitigate these costs through operational cost savings and, where appropriate, pricing.
“Primark has been very successful in this period in attracting new customers with its proposition of good quality merchandise combined with price leadership and well-invested stores.
“We have had a very strong contribution from new stores opened in the period, and today we are announcing plans for the development of our Primark business in southern states of the US.”
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ABF was the biggest faller in the FTSE 100 on Tuesday morning, down more than 5.5% on concerns about rising costs eating into profit margins.
Meanwhile, Premier Inn owner Whitbread Plc said its annual profit had bettered pre-pandemic levels, helped by strong demand for accommodation and leisure travel as more people enjoy holidays free of COVID-19 restrictions.
Budget hotel chains have benefitted from increasing demand as consumers try to cut spending due to cost of living pressures.
Whitbread said strong trading had seen its sales up 17% in the seven weeks ending 20 April compared to a year ago and Premier Inn saw accommodation sales 55% ahead of the same time last year in the UK.
Whitbread reported an adjusted profit before tax of £413m for the 52 weeks ending 2 March, adding that it expects inflation to be between 7 and 8% in the coming full year, but is “confident in being able to offset the impact on UK profits through like-for-like sales growth, new room expansion and a focus on cost efficiencies”.
Dominic Paul, Whitbread chief executive, said: “These are a fantastic set of results.
“While the recovery in market demand in conjunction with a structural decline in the independent sector has provided a helpful backdrop, it is the combination of our own initiatives and our clearly differentiated business model that has sustained our brand strength and delivered such an impressive operational and financial performance.”
