Associated British Foods PLC (LSE:ABF) clothing chain Primark is among high street retailers “bouncing back” while online spending slows, according to Barclays.
The bank raised the firm’s price target by 18% to 2000p on the back of the record sales and resurgence from last-years omicron-stricken sales that were highlighted in Tuesday’s trading update.
Primark increased UK sales 15% in the 16 weeks to January 7, which Barclays said was a “real standout” in an apparel market that grew only 5% in comparison.
“Growth is broad-based by destination – city centre, high streets and retail parks – but also by segment,” added the bank's analysts, claiming the brick and mortar shopping model “is back”.
Increased spending on apparel in the UK, new customers, a squeezed online market and easier comparisons to when the omicron variant of Covid-19 deterred shoppers were all given as reasons for this growth.
For the whole of the FTSE 100 clothing and food group, Barclays predicted Primark’s strong pre-tax earnings will be partially offset by lower sugar production, which will likely generate £170mln, down from an originally estimated £200mln.
AB Food in its statement gave guidance for significant growth but lower operating profit and earnings per share this year due to higher costs stemming from inflation, on revenue up 16% to roughly £6.7bn.
Other analysts raised forecasts too, with Citigroup citing the outperformance of stores versus online but expecting the "pandemic channel rebound" to fade.