Primark owner Associated British Foods on Monday raised its financial guidance for full year 2022-23, saying consumer spending had proven to be more resilient than it expected.

The group said Primark had traded “well ahead” of expectations, with sales in the first half to March 4 expected to be £4.2 billion ($5.0 billion), up 16 percent at constant currency, with adjusted operating profit margin now expected to be above 8 percent.

“Our proposition of great quality at affordable prices and attractive store experience is proving increasingly appealing to both existing and new customers,” it said, noting early reaction to its spring and summer ranges has been “very positive”.

Last September, Primark said it had decided to limit further price increases in 2022-23 beyond those already planned, seeking to maintain its value credentials among consumers.

The group, which also owns major sugar, grocery, agriculture and ingredients businesses, said total first half sales were expected be more than 16 percent ahead of the previous year at constant currency, with adjusted operating profit broadly in line with the previous year.

It said its food businesses, including grocery brands Twinings tea, Jordans cereals and Ovaltine drinks, continued to seek to recover inflation through cost mitigation and price increases.

For full year 2022-23, AB Foods said it now expected adjusted operating profit broadly in line with 2021-22 compared with a previous forecast of lower than the £1.44 billion made that year.

For the second half the recovery of significant inflation in input costs remains a management priority, the group said, but it noted inflation has become less volatile and recently some commodity costs have declined.

“Macro-economic headwinds for the consumer remain and may weigh on spending in the months ahead,” it said.

“At Primark, we remain cautious about the resilience of consumer discretionary spending in the face of continuing inflation in the cost of living and higher interest rates.”

Shares in AB Foods were up 2 percent in early trade, having increased 24 percent so far this year.

By James Davey; Editors: Sarah Young, Kirsten Donovan

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