AUS
NZ
UK
CA
USA
IND
Associated British Foods (LSE:ABF) reported on Thursday that like-for-like sales at Primark are anticipated to decline by approximately 0.5% in the second half of the financial year. This anticipated drop is attributed to adverse weather conditions in the UK and Ireland, which negatively impacted sales in womenswear and footwear categories.
Despite this, Primark is projected to see revenue growth of around 4% for the period, supported by continued expansion of its store network. The company’s full-year outlook for Primark’s adjusted operating profit remains steady, with an expected profit margin slightly exceeding 11.5%. This forecast reflects an increase in the product gross margin due to lower material and freight costs, alongside favorable foreign exchange movements. However, these benefits are somewhat counterbalanced by rising labor costs and increased expenditures on digital and data capabilities, technology, and brand marketing.
According to Associated British Foods, Primark is anticipated to achieve solid sales growth for the full year of 2025. This growth will be driven by ongoing store rollouts, alongside enhancements in product offerings, digital platforms, and brand initiatives. The adjusted operating margin for 2025 is expected to remain roughly consistent with the current year's level, as gross margins stabilize and further investment in strategic initiatives is undertaken to support sustainable growth.
Sales volumes at Primark have been softer recently, although average selling prices have increased due to product mix adjustments. Effective management of discounts is expected to allow Primark to end the year with strong inventory levels.
In the UK, second-half sales are predicted to be around 0.5% lower overall, and down approximately 2% on a like-for-like basis, impacted by reduced footfall due to challenging weather conditions, particularly in April and June. In contrast, sales growth in Europe, excluding the UK, is forecasted at around 5%, driven by store expansion. Strong growth is reported in several European markets, including Spain, France, and Italy, with like-for-like sales growth projected to be around 0.9%. However, Ireland's performance was notably weaker due to similar weather impacts as seen in the UK.
In the US, Primark is expected to experience a sales growth rate of approximately 25%. The company has opened three new stores in the region and launched its first US marketing campaign in the New York area to boost brand visibility.
Additionally, Associated British Foods announced an extension of its share buyback program by £100m, following strong cash generation throughout the year.
