Primark’s owner Associated British Foods issued a second-half trading update on Wednesday with the value-focused fashion, beauty and home retailer seeing a UK improvement and a very buoyant US, but a weaker Europe.

As it prepares to open its first franchise stores in the Middle East next month, the division is clearly holding its own in tough times. It’s not without its challenges but the overall picture is positive.

The company’s second half ends on 13 September, and ABF CEO George Weston said the period was marked by “a challenging environment, characterised by consumer caution, geopolitical uncertainty and inflation”. 

As mentioned, Primark “delivered improved trading in the UK and strong sales growth in the US, while trading on the continent was softer in a weaker consumer environment”.

This varied performance means that Primark’s sales growth is expected to be around 1% overall for the half by the time all the figures are in over the next few days.

That growth has been spread fairly evenly across the third and fourth quarters. But while total sales were up overall, like-for-like sales for H2 are expected to be around 2% below last year, with a decline of 2.4% in Q3 and a projected decline of around 2% in Q4. 

It means that for the full 2025 financial year, the company expects Primark’s sales growth to be around 1%, with like-for-likes down. Its store rollout programme is continuing to drive sales growth of around 4%. 

UK improvement

Looking back at those regional differences, the company said its trading in the UK and Ireland was “a good sequential improvement on H1 reflecting our strong product offer, particularly in womenswear, and increased digital engagement, supported by more favourable market conditions”. 

Total H2 sales for the UK/Ireland should grow 1% with the retailer’s UK market share increasing from 6.6% to 6.8%, according to Kantar. The 1% Q3 sales rise was helped by strong Easter trading, and the same level of growth in Q4 comes despite it lapping double-digit sales rises in the last weeks of the prior financial year. 

Primark said that “while the UK clothing market continued to decline, it was at a slower rate than H1, supported by favourable weather. Our performance reflects our strong product offer, particularly in womenswear, and good execution. In addition, we benefited from our increased investment and focus on digital customer engagement, including good momentum in our Click and Collect service which is now available from all 187 of our British stores. Active management of our UK store estate also drove a sales uplift from store openings, relocations and extensions”. 

Excluding the benefit from store estate changes, like-for-like sales in the UK and Ireland are expected to be “close to flat in H2, with a decrease of 0.7% in Q3 and broadly flat in Q4”.

Softness in Europe, strength in US

In Europe where the company was weaker, its performance varied quite widely across the different markets. Spain and Portugal, sales are expected to grow around 2% in H2. Sales were broadly flat in Q3 and are projected to grow 3% in Q4. Primark “outperformed a weaker Spanish clothing market in H2 and had a good contribution from new store openings”. 

In France and Italy, sales are expected to decrease around 4% in H2 in a weaker consumer environment with declines of 4% in each of the last two quarters.

Sales in Central and Eastern Europe are looking stronger and are expected to increase around 9% in H2, driven by recent store openings. Sales grew 17% in Q3 and are projected to grow 4% in Q4. 

In Northern Europe, sales are expected to decline around 2% for the half as a whole, with a decline of 1% in Q3 and a projected decline of 3% in Q4. Like-for-like sales are expected to dip around 1% in H2, with growth of 0.5% in Q3 and a projected decline of 2% in Q4. While sales “were softer in a weaker German market in H2,” it said, “the recent restructuring of our store footprint in Germany and the Netherlands has driven much-improved sales densities and profitability”.

As for the US, sales are expected to end up around a massive 23% higher for H2, with growth of 21% in Q3 and projected growth of 24% in Q4. Its stores clearly “traded well in H2 and our value proposition resonated with customers”. The company said it “made further progress with our space expansion programme, opening four new stores in H2, including our first store in Tennessee”.

Looking ahead, Primark currently expects the overall consumer environment to remain uncertain. But the adjusted operating profit margin for the full year should be broadly in line with last year, “reflecting Primark’s strong operating model”. As expected, its adjusted operating margin in H2 will be below H1, “mainly due to the phasing of one-off items which benefited H1”. But “focused cost optimisation and efficiency savings supported a step up in investment across product, brand and digital initiatives”.

Store expansion remains hugely important and H2 saw 15 new openings, four in the US, three in Spain, two in Portugal, two in France, one in Italy, one in Romania and two in the UK. It also completed refits in 22 stores. In the Netherlands, it closed one store and “right-sized” another.

It also “made good progress with preparations for the first store openings in the Middle East under our franchise agreement”, which will start with one store in Kuwait next month and two stores in Dubai in early 2026.