Sales at Primark have fallen for the first time since the pandemic forced all shops in the UK to close, as mild weather and low consumer confidence hit sales.
Associated British Foods (ABF), which owns the fashion retailer, said sales at Primark’s established stores fell 6% in the final three months of the year.
“Trading activity within elements of our shopper base was weak as a result of cautious consumer sentiment and a lack of seasonal purchasing catalyst given the mild autumn weather,” the company said.
Sales of seasonal womenswear, such as coats, knitwear and boots, were particularly affected. A strong Christmas failed to offset poor trading during October and November when the weather was mild for the time of year.
The retailer, which has a relatively small digital operation only allowing internet orders to be collected from some stores, admitted it also lost market share to rivals with a bigger online presence. Rivals such as Marks & Spencer and Next increased sales over the period, as shoppers shifted to home deliveries during stormy weather in December.
ABF said total sales over the three months had risen 2%, behind forecasts, and it expected annual sales to rise by no more than 3%. It had previously predicted they would rise by about 5%.
Sales in mainland Europe and the US are expected to continue to perform better than the UK and Ireland. In the quarter, sales rose 9% in Spain and Portugal, 5% in France and Italy, and 17% in the US as Primark opened new stores.
Primark’s figures reflect difficult trading for clothing retailers in the run-up to Christmas with poor consumer sentiment. Retailers fear the downbeat mood, driven by concerns over the economy and job prospects, will depress sales in 2025.
ABF’s grocery business also struggled in the UK as sales in its bakery arm, which includes the Kingsmill and Allinson’s bread brands, fell back after Tesco removed a number of the group’s products. Overall grocery sales for the group rose by just 1%, led by strong sales of Twinings and Ovaltine, particularly overseas.
ABF’s share price fell slightly but James Grzinic, an analyst at Jefferies, said there was some relief that there was no cut in profit margins at Primark amid hefty discounting in the UK clothing market, which makes up 45% of the chain’s sales.
ABF said it expected to hold profit margins as “good cost management offsets inflation”.
“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,” the company said.
