Primark cuts sales targets due to weak UK shopper demand

It told investors on Thursday that it is targeting “low single-digit” sales growth for the brand in 2025.

In November, the company had said it expected “mid single-digit growth”.

ABF’s retail business, which is predominantly the Primark brand, saw sales nudge 0.4 per cent lower to £3.36bn for the 16 weeks to January 4. This was a rise of 1.9 per cent on a constant currency basis.

Primark said sales in the UK and Ireland declined by 4 per cent, with a like-for-like drop of 6 per cent.

Growth over Christmas was dragged back by “weaker autumn trading in a challenging retail environment” across the UK.

It said demand from some shoppers was “weak as a result of cautious consumer sentiment” while mild autumn weather impacted sales of items such as coats and jackets over October and November.

The group said Primark’s weakness in the UK was partly offset by gains in Spain, Portugal, France, Italy and the US.

ABF, which also runs large grocery, sugar and agriculture divisions, revealed that total sales across the conglomerate slipped by 2.2 per cent to £6.73bn for the 16-week period.

The grocery arm, which owns brands including Ryvita, Twinings and Pataks, saw sales fall 1.8 per cent to £1.39bn.

It said good growth from international brands, including Twinings and Ovaltine, was partly offset by declines in certain US and UK-focused brands.

In the UK, overall sales declined due to weaker sales from its Allied Bakeries arm, which makes Kingsmill bread.

Sugar sales dropped by 6 per cent for the period after the group was knocked by tumbling sugar prices in Europe.

Richard Hunter, Head of Markets at interactive investor, commented: “This is not an update to set the pulse racing, with some particular disappointment emanating from the central Primark business.

“When AB Foods reported its full-year numbers in November, covering the year up to mid-September, the performance had been solid and the outlook set fair.

"The strong cash generation led to a new share buyback programme of £500m, as well as an increase of 50 per cent to the total dividend for the year including specials, which now translates to a projected yield of 4.7 per cent, significantly higher than has been the case in recent times.

“However, some of the concerns which the market subsequently anticipated, leading to a share price decline of 22 per cent over the last six months, have unfortunately come to pass.

He added: "While only accounting for 13 per cent of overall sales, the Sugar business was under pressure due mainly to oversupply, while the fact that Primark trades at the lower end of the value chain raised questions as to whether an already hard-pressed consumer would be able to continue with discretionary spend.”

He continued: "The update and outlook comments show that cautious consumer sentiment is already beginning to weigh on prospects, as had largely been predicted following the measures announced in the Budget which were seen as being particularly harmful to the retail sector.”