Friday, February 26, 2016

ABF operating report Q1 2016


ABF, Q1, 2016, operating report, front page

Associated British Foods, one of my few very successful holdings, arrived with their operating report for the first quarter of 2016.

The report in full can be found here and for the previous report please visit ABF annual report 2015 and to find out more regarding ABF then please check out the analysis of ABF 2015.

There is not that much to say regarding this report because there is not much in it however many of their business units have improved their performance and of course especially Primark has been doing very well if one excludes the currency effects. Including the currency effect and all their businesses are showing weak results. They mentioned once again that the sugar prices are increasing due to poor harvests and that they unfortunately will not be able to profit from that during the coming year because they have already fixed contracts. They hope it will be better one year from now for the sugar business but it is definitely sure that 2016 will be yet another bad year.


The picture below is from the outside of the Primark in Madrid that I visited last weekend. It is the new flagship store that was opened in October 2015 and it contains four floors!


Madrid, Primark, flagship store


Inside it was a bit odd to me because it was as if it was an entire mall but it is only one store and one "brand" being sold inside this mall.


Madrid, Primark, flagship store, inside


I found it to be too big and I think it is a mistake of Primark to start to go into this direction. The reason for this is that people were also shopping as if it was a mall. By this I mean they went in to the "location" of whatever it is they wanted to buy. The looked around there until they found something and then they went and bought that and only that. This is not Primark in my eyes. Primark is people walking out with several filled bags with cloths and it is not people walking out with a tiny, tiny little bag containing a pair of shorts or whatever. By this I mean that the store was so big that one lost the overview and did not even see other things that potentially could have interested me as a customer.

Conclusion: The operating report that they arrived with was ok but yet again nothing special to get excited over. They will keep open stores in the US and I really want to get some figures how the business are coming along there. I was very unhappy with the new new flagship store in Madrid and I seriously consider this to be the wrong direction that Primark is stepping onto and I hope that they will learn very quickly and stop this nonsense of megastores without any overview. I can agree on that it looks nice but with that kind of m2 sales surface I want to see sales and not nicety.

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