Growth slowed at Primark clothing stores in the Christmas quarter due to unseasonal weather at the start of the period, Associated British Foods (ABF) has reported.
Like-for-like sales in Q1 rose by 2.1% in the 16 weeks to 6 January, a slowdown from 8% growth in the previous quarter.
Primark’s total sales were up by 7.9% in the first quarter.
Unseasonal
The unseasonal heat at the start of the period impacted winter sales, but trading at Christmas was strong, especially in the UK.
"It was a tricky period," finance director of ABF Eoin Tonge told Reuters. "It started off very slowly with the weather and that impacted certain countries harder than others, particularly Spain where it was warmer for longer."
Tonge added that the group had flagged a slowdown in underlying sales growth, which helped over the Christmas period.
More Confident
ABF said it was more confident that Primark's adjusted operating profit margin would recover to over 10% in its 2023/24 year, driven by a further improvement in the cost of the products it buys.
"This should insulate us well against potential additional costs of supply, due to the disruption in the Red Sea, should they arise," it said.
Shares in the group were up by 1.3% in morning trading, extending gains over the last year to 24%.
Red Sea
The report comes on the same day that Primark announced it was hopeful customers ‘won’t notice’ Red Sea disruption in stores.
Attacks by the Iran-aligned Houthi militia on ships in and around the Red Sea since November have slowed trade between Asia and Europe and alarmed major powers in an escalation of the war between Israel and Palestinian Hamas militants in Gaza.
"We're hopeful [customers] never notice it in stores," Tonge said. "Some of our store managers might notice, little bits and bobs might be impacted, but we don’t think the customer should be impacted that much."
Tonge said that if the Red Sea disruption continued beyond Easter, Primark would have to place earlier orders with suppliers.
