Ahead of a first-quarter update, shares Primark owner Associated British Foods PLC (LSE:ABF) are up by a quarter in the past 12 months, helped by improved earnings momentum at its budget clothing chain along with easing cost pressures.
Back in November, as it unveiled a new £500 million share buyback and special dividend, the FTSE 100 group forecast higher profits for 2024 and continued strong cash flow.
This coming Tuesday it will provide an update on trading for the first four months of its financial year to September.
"AB Foods is unlikely to discuss wider capital allocation issues until its first-half results in April," said analysts at AJ Bell.
The outlook for 2024 is likely to be a key focus for investors and analysts, with sales currently expected to rise 5% for 2024.
This time last year the first four months of fiscal year saw £6.7 billion sales, of which £3.55 billion was from food and the rest from Primark.
For the whole of 2024, AB Foods has already suggested that Primark will show a modest increase in like-for-like sales and a larger increase in stated sales, thanks to store openings and its online roll-out. The adjusted operating margin at the retailer is expected to exceed 10%, compared to the 8.2% earned in fiscal 2023.
Sugar is expected to deliver a substantial increase in profits, Agriculture will increase adjusted operating profit, Grocery to come in with broadly flat profits and Ingredients to show a modest decrease in sales and earnings.
"More strategically, watch out for an update on Primark’s store opening plans in Europe and America in fiscal 2024, as it targets 530 stores by 2026 from the current count of 432, and also on its online roll-out, as well as comments on input cost inflation and pricing across all of its operations," said AJ Bell.