Associated British Foods: Accelerated Store Network Expansion Compensates for Soft Volumes

No-moat Associated British Foods, or ABF, reported a trading update for the 16 weeks to Jan. 6 (first quarter of fiscal 2024) with Primark like-for-like, or LFL, sales growth of 2.1%, driven primarily by slightly higher average prices compared with the prior year. LFL sales growth was stronger in the U.K., at 3.8%, given robust sales in the run-up to Christmas. Primark’s market share development was also positive in its home market, posting a 10-basis-point improvement in December compared with the prior year. In Continental Europe, LFL sales were up by 1.3%, with some of the markets experiencing tough economic conditions and facing strong comparatives from the same period of last year. Management expects pricing to be benign for the rest of the year, given soft volumes and continued pressure on consumers’ disposable income.