Associated British Foods PLC, owner of the fast-fashion chain Primark, is reorganizing its financial organization in the face of rising raw material and energy costs.
The London-based food retail and processing conglomerate said on Thursday that Eoin Tonge would become its new chief financial officer. Mr Tonge, who currently serves as chief financial and strategic officer at retail chain Marks & Spencer Group PLC, will join no later than February next year, ABF said.
Mr Tonge is expected to succeed John Bason, who had served as ABF’s chief financial officer since 1999. Mr Bason will become chairman of a new strategic advisory board and senior adviser to the Primark business, the company said.
Mr. Tonge has been Chief Financial Officer of Marks & Spencer since June 2020 and Chief Strategy Officer since May. He is subject to six months’ notice, Marks & Spencer said, adding that a search process for his successor was underway.
ABF’s new advisory board aims to provide outside expertise to Primark executives as they work to expand the chain’s stores in the US, particularly in East Coast markets such as Philadelphia and New York, and its digital operations, Mr. Bason said Thursday. Primark had 403 stores in May, most of them in the UK and mainland Europe.
“It’s my responsibility to really bring together people with expertise in each of these areas and then channel them so that the appropriate level of support is given to Primark’s management team,” Mr Bason said. “Primark is a very large international company in a rapidly changing market and we believe this all provides a great opportunity. »
In addition to its retail business, the company also operates sugar and bread factories, sells animal feed, and has subsidiaries such as George Weston Foods in Australia.
Mr Bason said he had been thinking about succession planning for his post since late last year, which sparked the search for a successor.
“It’s about passing the baton in a hopefully thoughtful way,” he said. He plans to stay on as CFO until the end of April 2023 to ease the transition.
Last month, ABF reported revenue of £4.05 billion for its fiscal third quarter ended May 28, or $4.84 billion, up 32% from the reporting period. prior year, due to price increases in response to rising raw material and energy costs.
Primark’s revenue rose 81% to £1.73 billion from the prior year period, ABF said. Retail accounted for 43% of ABF’s revenue for the quarter, up from about 31% a year earlier, according to a filing.
The company also said Primark was on track to deliver an adjusted operating profit margin of 10% for the full year, up from 7.4% in 2021.
“We expect Primark as a whole to grow profits very strongly as the economy has really come out of Covid,” Mr Bason said.
ABF’s new CFO will likely focus on issues such as developing Primark’s e-commerce offering and finding ways to increase future cash returns, said Richard Chamberlain, managing director of RBC Capital Markets. LLC, an investment bank. The company was slow to develop such an offering, which hurt when the pandemic hit. Last month, ABF announced it would begin a trial of a click-and-collect service in as many as 25 Primark stores with an initial offering of children’s clothing and products later this year.
The CFO change is a smart move as ABF is now well on its way to recovery from the hits it took during the coronavirus pandemic which led to store closures at Primark, according to a note from analysts at Shore. Capital Group Ltd., an investment company. .
“Tonge joins a high-quality business within ABF, with a distinctive shareholder structure, excellent values, a top-notch assortment of different businesses and a very strong balance sheet,” the analysts wrote.
—Sabela Ojea and Nina Trentmann contributed to this article.
Write to Mark Maurer at [email protected]
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