Soggy early summer weather knocks Primark sales
Owner AB Foods said Primark’s UK like-for-like sales fell 0.6% in its third quarter and are set to drop by around 3.1% in the fourth quarter.
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Your support makes all the difference.Dismal early summer weather hit sales at budget clothing retailer Primark, owner Associated British Foods has revealed.
The group said Primark’s UK like-for-like sales fell 0.6% in its third quarter and are set to drop by around 3.1% in the three months to September 14.
This is likely to leave the retailer’s UK comparable store sales down about 2% overall in its second half.
It said so-called shopper footfall was “impacted by challenging weather, particularly in April and June”, which took its toll on seasonal women’s clothing ranges and footwear.
Primark also lost UK market share in the six months to July 21 as high street trade suffered in particular from the weather, the group added.
The British weather was not in Primark’s favour this summer
A better performance elsewhere across Europe, where six-month sales are expected to grow 0.9%, is set to leave Primark’s second half sales down around 0.5%.
The group said it saw average selling prices increase thanks to the “mix” of sales while it had successful markdown promotions.
AB Foods confirmed that Primark’s underlying earnings are expected to remain on track for the year to September 14 despite the sales hit in the UK and Ireland.
This comes as it benefits from lower material prices, easing shipping costs and foreign exchange improvements, though it is still facing rising staff wage bills and higher spending on IT and marketing.
It also expects Primark “to deliver good sales growth in 2024-25 as we continue to execute our store rollout programme and our product, digital and brand initiatives”.
But AB Foods warned over next financial year’s profits in its sugar arm, which is being affected by a sharp fall in sugar prices across Europe.
Profitability in the division is lower than expected in the current financial year and AB Foods said this will continue into 2024-25.
It said: “We expect the reduction in pricing seen in the fourth quarter of 2023-24 to significantly impact performance in our European sugar business next year, with operating profit for the overall segment now expected to be in the range of £50 million to £75 million in 2024-25.
“However, we expect profitability to recover in 2025-26 to be more in line with 2023-24, as a result of the lower beet prices that have been contracted and a rebalancing of supply and demand in the market.”
George Weston, chief executive of AB Foods, said: “While the British weather was not in Primark’s favour this summer, robust growth in other markets and new store openings have driven good sales overall.
“Grocery and ingredients have also grown well in the second half, in line with our expectations, and we will continue to build on this momentum.”
He added: “Notwithstanding this short‐term volatility in sugar, we are optimistic about the outlook for the rest of the group.”