Barclays slashes the valuation of parent Primark after a profit warning.

Hash of Barclays to the matrix evaluation of Primark following his earnings warning. British banking experts have revised their advice on Associated British Foods (AB Foods) from overweight to hold; and target price at 15 pounds from 23.

” With the the pound sterling at its weakest level against the dollar since 1985.as well as record energy coststhe site Primark margins are under pressure. In the second half of this year, the new expectation is for an 8% margin, but the main disappointment is that 2023 margins will be lower than in the second half of 2022 (i.e. less than 8% ),” say these analysts.

This figure is to be compared with their previous forecast of 10%, which justifies the lowering of their valuation. According to them, ” neither currency nor energy are under the control of Primark.“This adds to weak comparable sales in Europe.

In this regard, they point out that “ the European clothing market is weak and consumers are cautious, with their purchasing priorities elsewhere“. On a positive note, they point out that Primark’s sales in the UK are very strong, with an increase in the number and density of customers.

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