Associated British Foods Share Discussion Threads

[queen gibbs] 07/9/2018 12:34

EI - I have spent several years working on 'the High Street' in both the UK & Europe for some of the largest retailers, in that time I have made several senior contacts who I keep in touch with

Another poor day on the share price?

tlobs2 - great comment similar to what you leave for others (having read your profile) at any time please tell me when I'm factually incorrect

Rumour has it another Executive Director left this week - didn't last a year!
All is not well in the happy ship Primark

[nilsholgerson] 07/9/2018 07:30

I think Vivergo has been fully written off in the books so this will increase profits by GBP30m that the plant was losing per year lately. Nevertheless a sad story and definitely a totally unsuccessful investment.

[philanderer] 06/9/2018 23:53

'Bioethanol plant to close citing ‘lack of pace’ for change'


........The Hull plant was a joint venture between AB Sugar, BP and DuPont. It is now owned by Associated British Foods, AB Sugar’s parent, which also cited the low bioethanol price and high wheat prices as contributors to difficult trading conditions.

[philanderer] 05/9/2018 21:46

I didn't know the Retail Operations director had gone but the other news was freely available..


'Peter Franks, Primark’s director of store development resigns'

Wednesday, 18 July 2018

Primark, part of the Associated British Foods has announced that Peter Franks, the company’s director of store development and design, will be leaving the business later this year. The company also said that it has promoted Mark Wood in a newly created role of brand and store development director and will take over Peter’s responsibilities.

[tlobs2] 05/9/2018 21:37

He has a Ouija Board and uses it to speak to the other side and then try to influence the share price of a FTSE 100 company with daily deramps on a free BB.

What a waste of ones time .....

[essentialinvestor] 05/9/2018 20:38

Gibs, how do you access to this info?.

[nilsholgerson] 05/9/2018 20:35

QG good points and it seems you have useful inside access. I believe that the potential is there for Primark to replicate Zara in its global reach, its a matter of execution. The demise of other retailers in Europe and US, might provide access in bulk, to good and experienced people. Or as I said, I would not be surprised if there is an m&a play.

[queen gibbs] 05/9/2018 19:36

In reference to 'heads'
Primark have lost two critical ones in the past three months
Director of Retail operations & customer service
&
Director of Store Development - key role to lose 4 months prior to opening the largest Primark in the world in Birmingham?

[essentialinvestor] 05/9/2018 19:10

Gibbs, surprised to hear that, my impression was the business being
cautiously managed.

[queen gibbs] 05/9/2018 18:12

Primark have 2 x HO
Dublin - looks after everything Ireland, Europe & USA
Reading - looks after the UK
You are correct about quality - the business has grown at too fast a pace to maintain consistency really
When they acquired Littlewoods (about 12 years ago) they added another 40 stores - nearly all larger than their existing units which stretched resources
As their reputation as an employer of choice is very poor for both staff & management they have to 'overpay & top load' management - so when you accelerate very quickly the 'pot' of quality/experience runs dry even quicker (turnover of staff/management is far higher than UK average)
Lack of quality people is one of the main reasons that they have hesitated about larger/quicker expansion
Another concern is saturation - UK roadmap is all but exhausted without cannibalization of existing stores
Germany - stores are far too big & have underperformed for the past three years - + hardly the Germans first choice of retailer
USA - the original stores that they opened were too large & they are now looking for smaller footprints circa 40,000 sq ft - may open more on less space
As I have said before Primark will hold it's own as a retailer, however, the investment will come from ABF & whilst sugar continues to be under pressure & Primark growth levels out the desire to invest becomes less
I believe that a year ago George Westons shares were valued at £90m as it stands today circa £60m? Some loss!

[nilsholgerson] 05/9/2018 17:34

Thanks EI, I was referring to Primark HQ and did not allude that the people are not good. Is just they are not enough? How many new store rollouts can a Head of Real Estate or all other relevant Heads have under their remit at any time? I would imagine not more than 5-10.

[essentialinvestor] 05/9/2018 17:09

Good post, would take a different view on any lack of quality people.
ABF is effectively the Weston family vechile, at a 51% holding.
Any conservatism is a deliberate strategy.

[nilsholgerson] 05/9/2018 17:02

Very appealing levels right now. In effect you are buying at the bottom of the sugar story (look at Suedzucker for pure sugar comparison) and you need just a small hint that US is getting traction, in order for the share to rerate. Currency, yes will potentially have an impact on Primark margins (although note that Primark hedge forward 1 year on a rolling base, so H1 might be hedged at better rates than current) but this should be ameliorated by the translation of foreign profits (in strong currencies) back to sterling.Also who knows whether Primark will shift more procurement to Turkey in order to protect margins by buying in TRY. And all these pressures are transient. Primark in the past tackled high cotton prices or other pressures in a savvy way that protected margins. With regards to the US, I am hoping that Primark has seen some of the benefit of people being on jobs and generally being willing to spend. Any hint that they will accelerate the roll out in the US will make the stock soar. On top of that, you have so much scope for further expansion in Europe and no clear competitor at these price points that make the story even more robust. With zero debt on their balance sheet, imagine what would happen if they would want to accelerate Primark growth inorganically. I think their bottleneck is that they do not have enough people at HQ to be able to grow faster.

[essentialinvestor] 05/9/2018 15:18

No coincidence that as GBP reversed, so did ABF today.

[essentialinvestor] 05/9/2018 15:05

Gibbs, make sure to tell us when you buy ).

[queen gibbs] 05/9/2018 14:39

Agree will EI
A HOF customer will never migrate to Primark
A bigger share of a smaller market does not mean an increase in revenue?
If HOF & Debenhams do close or close units it's one less reason for customers to visit the High Street - this will have a negative effect on everyone remaining
Cross rail being put back a further year is a kick in the spuds for retailers who have their Flagship stores on Oxford Street (most of them)
9% of Primarks total sales comes from their two stores on Oxford Street - if they don't perform it's an uphill battle for the rest of the chain from day one
I don't believe ABF have bottomed out just yet!

[essentialinvestor] 05/9/2018 10:50

Added a small amount under 2232, however as mentioned to Phil previously,
around £20 would not surprise me on a continuation of £ weakness.
Hopefully not the case.

Waskill, little cross over between HoF and Primark in clothing,
very different demographics.

[justiceforthemany] 05/9/2018 10:47

Some shares are allowed to happily trade at 50-100x earnings (Just Eat, BTG, Abcam), others 30x earnings (SSPG), some sub-10/10 (SAGA, PAF, HGM, PRU,LWB). Vodafone has suddenly been re-rated having spent the last decade or more around 200p. Who decides what P/E a share should trade at? Netflix, Amazon and co have been trading as high as 300x earnings. The market has always been very fickle and irrational. The market makers and hedge funds decide the share price All we can say is ABF is now at a 5 year low.

[wskill] 05/9/2018 10:20

I am also very surprised to be able to buy ABF at these levels with the decent brands they have in their stable ok sugar is not at its best at the present.But it will recover cannot see much wrong with the rest of the brands Primark looks ok it can only gain market share with the present closure plans of the HOF ect.

Not much sense of them taking the Primark offering online with prices as they are in store the postage would destroy margins.

[essentialinvestor] 05/9/2018 10:05

On what basis should ABF be trading at £30?. We can all pluck a figure out of the air, I'll start with £50.

[this_time_its_different] 05/9/2018 10:00

It's a brexit selloff, and the fact the £ has gone through the floor. Depressing times are the best times to buy. ABF should be trading around £30 at least, but Mr Market is depressed. Mr Market thinks Brexit is the end of the world. I suspect a strong rally for all UK stocks after March 2019.

[justiceforthemany] 05/9/2018 08:31

2 trading days to update - Monday 10th

[rounder2] 04/9/2018 16:31

This is getting depressing

[essentialinvestor] 04/9/2018 11:35

Got my small add under '78.

There is something to be aware of for the next update,
if ABF make cautious noises on Primark margins (given £ selling off hard)
the share price may not look pretty.