Primark sales target slashed after 'challenging' Christmas for UK high street
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Primark has cut its sales expectations as "cautious" UK shoppers and wet weather weighed on performance. Its parent company, Associated British Foods (ABF), reported a downturn in UK sales in recent months as financial strains continue to grip households. On Thursday, ABF informed investors that it now aims for "low single-digit" growth for Primark by 2025, downscaling its ambitions from the "mid single-digit growth" projected in November.
Sales for ABF's mainly Primark-based retail sector dipped slightly by 0.4% to £3.36bn for the 16 weeks leading to January 4—a 1.9% increase if currency fluctuations are held constant. In the UK and Ireland, Primark experienced a 4% decrease in sales, with comparable sales witnessing a sharper 6% fall. A tough retail climate in the UK over the festive period intensified after softer autumn trade, exacerbated by subdued consumer confidence and milder weather which hindered sales of typically popular autumn items like coats and jackets throughout October and November.
This dip in the UK market was counterbalanced by advances in countries including Spain, Portugal, France, Italy, and the US. ABF's extensive operations encompassing grocery, sugar, and agriculture sectors also felt the pinch, with total sales across the group declining by 2.2% to £6.73BN for the 16-week span. Within the grocery division, home to household names like Ryvita, Twinings, and Pataks, there was a 1.8% fall in sales to £1.39bn.
The company reported that strong growth from international brands, such as Twinings and Ovaltine, was partially offset by a decrease in certain US and UK-focused brands. In the UK, total sales fell due to weaker sales from its Allied Bakeries division, which produces Kingsmill bread.