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Primark's like-for-like sales are projected to decline by around 0.5% in the second half of the financial year, mainly due to poor weather conditions in the UK and Ireland that affected womenswear and footwear sales, according to its parent company, Associated British Foods (LSE:ABF).
Despite this, Primark's overall revenue growth is expected to reach approximately 4%, driven largely by continued expansion of its store network. The outlook for the full-year adjusted operating profit remains stable, with profit margins anticipated to exceed 11.5%. This improvement is attributed to a rise in product gross margin, thanks to lower material and freight costs and favorable foreign exchange movements.
However, these benefits are somewhat countered by inflation in labor costs and increased investment in digital capabilities, data infrastructure, technology, and brand marketing. AB Foods remains optimistic about Primark’s future, forecasting strong sales growth in full-year 2025, supported by ongoing store expansion, product development, and digital initiatives.
The company also expects Primark's adjusted operating margin in 2025 to be consistent with this year's level as gross margins stabilize, and investments in strategic initiatives continue to drive long-term growth. Although overall sales volumes were soft, the average selling price increased due to product mix adjustments, while discounting was carefully managed. Primark is expected to finish the year with satisfactory inventory levels.
In the UK, second-half sales are forecast to drop by 0.5%, with a 2% decline on a like-for-like basis, as footfall was affected by adverse weather conditions in April and June. Nevertheless, Primark expanded its UK presence by opening two new stores, extending two existing ones, and relocating two more during the period.
In Europe, excluding the UK, sales growth is projected at around 5%, with strong contributions from space expansion. Spain, France, and Italy saw solid growth, while like-for-like sales across Europe are expected to rise by 0.9%. Ireland's performance mirrored the UK due to weather conditions.
In the US, Primark continues to make good progress, with sales growth forecast at approximately 25%. The company opened three new stores and launched its first US marketing campaign in the New York area to boost brand awareness.
AB Foods also announced an extension of its share buyback program by £100 million, reflecting strong cash generation throughout the year.
