Primark owner Associated British Foods PLC (LSE:ABF) is having no qualms about reduced consumer spending after a strong showing in the third quarter saw sales jump, analysts have said.
“If the consumer is beginning to have doubts about spending, such reticence is not coming Primark’s way,” interactive investor analyst Richard Hunter noted after ABF penned a 16% rise in sales to £4.7bn during the third quarter.
Higher prices did indeed largely fuel the 7% increase in like-for-like sales, but regardless “Primark continues to hit the right price point for cost-conscious consumers,” Hunter continued.
ABF attributed warmer weather and easing supply chains for boosting growth across its retail and food wings respectively in a Monday morning announcement.
A strong performance from Primark’s high street stores, alongside the fact the company is continuing to open more, also marks a “return of the physical shopper,” Hunter said.
AJ Bell analyst Russ Mould echoed the view that Primark was a go-to for consumers looking to revamp summer wardrobes on a budget.
Both analysts noted that ABF had managed to push up prices without damaging its image as a low-cost option, helping to widen margins and boost the company’s full-year outlook.
Questions over sustainability could also be raised, they said, though ABF’s diversification between retail and food means it is somewhat protected from economic cycles and changing consumer habits.