Primark owner Associated British Foods has issued an update for the 16 weeks to 4 January 2025 with its retail unit seeing sales down very slightly as weak UK and Ireland ops proved to be a drag on its growth.

Q1 revenue for the Retail division (that is, Primark) was £3.362 billion, which may have been a small 1.9% increase at constant currency but based on actual exchange rates was down 0.4%.

Yet the company seemed pleased with the performance of the division overall saying that it “delivered good growth across our key growth markets, Spain, Portugal, France, Italy, Central and Eastern Europe and the US”. 

Unfortunately, as mentioned, sales in the UK and Ireland declined in the quarter, although with growth in like-for-like sales over the key Christmas period. But this was “more than offset by weaker autumn trading in a challenging retail environment”.

By category, in womenswear, its performance was “most impacted by weaker sales in cold-weather and seasonal clothing, however, we saw strong sales of performance, leisure and nightwear”. 

Sales in both menswear and kidswear grew in the period and its Christmas product range “traded well and we had continued good growth from our Rita Ora, Paula Echevarría and Kem collections, as well as in our licensed products”. 

Markdowns during the period “were managed effectively, which resulted in good inventory levels and supported good gross margin delivery”.

International strength

The UK and Ireland are Primark’s biggest combined market, but other countries have been growing fast and now also account for significant sales figures. 

In Spain and Portugal, which accounted for approximately 18% of sales, they grew 9%, “reflecting good underlying growth in both markets and a strong contribution from recently opened stores”.

That was despite sales in the period being impacted by flooding in the Valencia region of Spain, which led to store disruption with one store still closed. 

France and Italy accounted for around 16% of sales and grew 5%. French growth was driven by recent store openings while in Italy, openings were key too, but that country also saw underlying growth.

Northern Europe makes up 13% of sales and grew 3% in total or 4.9% like-for-like. Strong sales growth in Germany and the Netherlands reflected the recent restructuring of its store footprint, “which has driven much-improved sales densities and profitability. Our growth in Germany also reflects the prior year impact of industry-wide strike action”. 

Central and Eastern Europe accounted for only 3% of sales but grew 22%, driven by recent store openings. During the period, it opened one new store in Czechia and one in Poland.

Meanwhile the US, which is responsible for around 5% of sales, grew 17% as it opened new locations. It now has 29 stores there in total and an additional 17 leases signed.

Domestic woes

Looking more closely at its UK and Ireland business, the sluggish sales here had a big impact as those two markets make up 45% of the retailer’s sales. 

Total sales declined 4% with like-for-like sales down 6%. In the UK specifically, sales declined 4% with like-for-like sales down 6.4% and the overall clothing retail market in the country declined. 

Primark said it saw “cautious consumer sentiment and a lack of seasonal purchasing catalyst given the mild autumn weather”. And its market share decreased slightly to 6.8%.

That said, a weak October and November (two months that were up against strong comparison months from a year earlier) was followed by “stronger sales and like-for-like growth in December over the key Christmas trading weeks”. 

The company doesn’t trade directly online but said its “online participation through Click & Collect in the UK performed well as we drove increased customer awareness and made more of our product ranges available to more customers, particularly those who shop in our smaller stores. We made further progress with the Click & Collect rollout, which is now in 113 stores”.

Store rollouts and outlook

Overall, it “continued to make good progress with the execution of our store rollout programme in Europe and the US, which contributed around 4% to total sales growth in the period. We opened eight new stores, extended one store, right-sized two stores and relocated two stores. We also made good progress with our store refurbishment programme”. 

So what of 2025? It’s now targeting low-single-digit sales growth this year. That will be “driven by our store rollout programme in growth markets in Europe and the US, which is on track to contribute around 4% to total Primark sales growth”.

And despite the market conditions in the UK and Ireland, “we remain confident in the Primark proposition and continue to focus on initiatives across product, digital and brand to drive underlying growth. We continue to expect Primark’s adjusted operating profit margin to remain broadly in line with last year’s level, as gross margins have continued to improve and good cost management offsets inflation and the step-up in investment”.