Deutsche Bank has kept its 'sell' call on Associated British Foods PLC (LSE:ABF) after the company’s latest update showed Primark still struggling to find its footing.
The broker has a target price of 2,130p against a current share price of 1,945.5p.
The main disappointment was Primark’s trading. Sales in the second half rose just 1%, with like-for-like revenue down about 2% as European stores underperformed.
Operating margins fell by around 80 basis points in spite of some relief on input costs.
Elsewhere in the group, sugar is expected to record a £40 million loss, a touch better after the reclassification of Vivergo but still shy of earlier hopes for a stronger recovery.
One-off charges of £200 million are also pencilled in, with £50 million to be paid in cash.
Deutsche said expectations had already come down ahead of the results, but that the weakness at Primark was still disappointing. It expects the shares to fall by a low to mid-single-digit % in response.