Budget retailer Primark sees annual earnings jump by more than 50 per cent

In the UK, comparable same-store sales rose 1 per cent as a 3.6 per cent rise in the first half was offset by a 1.3 per cent fall over the final six months as poor weather in April and June knocked demand for summer clothing. AB Foods said in the UK and Ireland overall, sales edged up 0.7 per cent in the year.

It said: “In both markets, challenging weather impacted footfall during the second half, particularly in April and June.”

The group added: “Sales of our seasonal summer clothing, as well as footwear, beachwear and swimwear, were impacted by wet weather.”

But it said it had seen a “very encouraging start” to autumn/winter trading, with “strong like-for-like growth in both markets in the last weeks of the financial year”.

The wider AB Foods group posted pre-tax profits up 43 per cent at £1.92bn, up 33 per cent on an underlying basis to a better-than-expected £1.96bn. The company said it was “well positioned”, but warned over profits in its sugar business for the new financial year thanks to pricing woes in Europe.

AB Foods said: “We expect the reduction in European sugar pricing in the fourth quarter of 2024 to impact performance in our sugar business significantly in 2025.”

It is pencilling in underlying operating profit for the sugar arm to be between £50m and £75m, down from £199m in 2023-24.

But the firm expects sugar profitability to recover in 2026, “to be more in line with 2024”.

The group said Primark is targeting mid-single percentage digit sales growth over the year ahead, boosted by a new store rollout across Europe and the US. Underlying profit margins are set to remain flat at the fashion division, however, as it said it would “step up” investment to drive growth.

Richard Hunter, Head of Markets at interactive investor, commented: “For the year as a whole, this is an unquestionably strong set of results which highlight both the benefits of diversification as well as the continuing engine of growth which is Primark.

“It has not all been sweetness and light, however. Ample supply has driven down sugar prices and therefore profitability, a situation which is likely to last well into next year.

“By the same token, the sugar business accounts for 13 per cent of overall group sales and the group’s sprawling business model has been able to compensate for this weakness elsewhere. Poor weather also hamstrung sales at Primark in the second half of the year, and taken together these two factors have led to a decline of 14 per cent in the share price over the last six months.

He added: “Indeed, an unusual feature of the group is its diverse range of activities, which allows not only for business and geographical diversification, but also for various units to pick up some of the slack elsewhere depending on the economic cycle. “This was of particular benefit during the pandemic when Primark was all but shuttered, and now that the retail arm is truly back on track, most of the other units are making separate and additional progress.”