Primark’s owner Associated British Foods delivered a Golden Quarter trading update on Thursday and said the 16 weeks to 3 January was a “challenging period”. It estimates that revenue has risen 4%, or 1% at constant currency.
Primark
But in the UK, Primark delivered “encouraging” sales growth of around 3%, with like-for-like sales growth of around 1.7% “in a difficult clothing market, particularly over Christmas”.
Primark also “gained market share in the period” and the company said the growth was “the result of our actions and investments to strengthen our customer value proposition through enhancing our product offer, improving price perception and increasing digital customer engagement, including Click & Collect. Our womenswear performance was particularly strong”.
The UK and Ireland account for 45% of Primark’s total business so that improvement is encouraging.
Europe weakness
That said, in continental Europe, which accounts for a larger 49% and where similar initiatives to the UK are “only recently under way and consumer confidence remains weak”, like-for-like sales declined around 5.7% in the period.
In the US (6% of its total), the retail environment was “volatile, which impacted consumer sentiment and footfall”, although sales continued to rise in double digits. The US has been among the stronger markets for the business in recent periods with new stores propelling its growth.
Its store rollout programme continued across markets and as expected, contributed around 4% to sales growth in the period, including the first store opening in Kuwait through its franchise model.
It all meant that overall, Primark’s sales growth in the period was below its previous expectations and it now expects H1 sales growth to be in the low-single-digits.
And profits could be muted too. The company added that “in a difficult trading environment, we significantly increased markdowns to manage inventory levels effectively, which impacted profitability”.
The business has a “broad range of initiatives in place and planned for the coming months, which we expect to drive improved sales and profitability, particularly in Europe”.
But profitability doesn’t look set to improve in the short term. ABF said that if Primark’s current sales trends continue in H2, the adjusted operating profit margin for the full year will be around 10%, similar to the first half, “as we continue to invest in growth”. It’s also worth noting that in H1 2025, it had a non-recurring benefit to profit of £20 million.
It’s to be hoped that the company’s performance improves in the medium term if not in the short term. It’s clear that the UK, which had been a sluggish market for the firm, has benefitted from initiatives put in place and as these roll out to Europe, there could eventually be a turnaround there.
ABF CEO George Weston said: “Primark has had a challenging start to the financial year, with a mixed performance. In the UK, focused actions and investments to strengthen our customer proposition have driven improved trading and market share gains, while trading has remained weak in continental Europe. In a challenging consumer environment, our focus is on factors within our control, including initiatives now under way in Europe aimed at improving performance. We are also making good progress to deliver Primark’s medium and longer-term growth opportunities.”
