Associated British Foods (ABF) downgraded its annual sales guidance for Primark on Thursday following disappointing results over the Christmas quarter.
The budget clothing business – known as Penney’s in Ireland and Primark internationally – saw disappointing festive sales in its main UK and Ireland market.
It said it was now targeting “low-single digit” sales growth in 2025 for Primark, having previously forecast “mid-single digit” growth.
It kept its forecast for an adjusted operating margin in line with the 11.7% that the group achieved in 2023/24.
‘Cautious Consumer Sentiment’
The group said Primark’s total sales grew 2% over the 16 weeks to 4 January – its fiscal first quarter – helped by store openings.
However, on a like-for-like basis they fell 1.9%, reflecting a 6.0% dip in the UK and Ireland – a market that accounts for about 45% of its sales.
Shares in the company opened down 2% but then pared losses to trade flat at 1,933 pence.
The group said growth in the UK and Ireland like-for-like sales over the key Christmas trading weeks was more than offset by weaker autumn trading in a challenging retail environment.
Primark said, “Trading activity within elements of our shopper base was weak as a result of cautious consumer sentiment and a lack of seasonal purchasing catalyst given the mild autumn weather.”
Other Retailers
Earlier this month, other retailers skewed towards lower-income consumers – sportswear group JD Sports, general merchandise business Argos, bakery chain Greggs and discounter Poundland – all reported weak Christmas trading.
In contrast, clothing retailers Next and Marks & Spencer reported upbeat trading.
However, Next did highlight relative weakness in stores compared with online results.
Unlike its rivals, Primark does not offer online delivery, though it does offer a click and collect service.
AB Foods, whose shares have fallen 14% over the last year, maintained its guidance for its grocery, sugar, agriculture and ingredients businesses.
Revenue in its grocery business – which includes brands such as Twinings Tea and Jordans cereals – grew 1% in the first quarter.
Sugar sales declined 2%.
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