Primark has warned that profits this year will be lower than previously expected after a sharp fall in sales across continental Europe, prompting heavier discounting to clear stock.
Associated British Foods said sales growth at the fashion chain in the first 16 weeks of the financial year was below expectations, with like-for-like sales in Europe down 5.7% as consumer confidence remained weak.
The owner of Primark said the tougher trading environment had led it to increase markdowns significantly to manage inventory levels, weighing on profitability. It now expects Primark’s sales growth in the first half of the 2026 financial year to be in the low single digits.
If current sales trends continue into the second half, the group said Primark’s adjusted operating profit margin for the full year would be about 10%, broadly in line with the first half but lower than last year, which included a £20m one-off benefit.
In contrast, trading in the UK was more resilient, with Primark reporting total sales growth of around 3% and like-for-like growth of 1.7% despite a difficult clothing market over Christmas. The retailer said it gained market share during the period.
George Weston, chief executive of Associated British Foods, said: “Primark has had a challenging start to the financial year, with a mixed performance. In the UK, focused actions and investments to strengthen our customer proposition have driven improved trading and market share gains, while trading has remained weak in continental Europe.
“In a challenging consumer environment, our focus is on factors within our control, including initiatives now underway in Europe aimed at improving performance. We are also making good progress to deliver Primark’s medium and longer-term growth opportunities.”
He added: “Our food businesses experienced mixed trading in the period, particularly in the US where consumer demand in certain categories has continued to weaken. While we expect the tough trading conditions to continue in the short term, we remain confident in the overall prospects for the group.”
