Group reports disappointing Christmas sales at Primark and increased markdowns
Shares in Associated British Foods, the owner of Primark, have plummeted after the company issued a profit warning following disappointing sales at the discount clothing retailer during “difficult” Christmas trading, reports BritPanorama.
The group’s shares tumbled as much as 12% in early trading on Thursday after AB Foods disclosed that Primark’s UK like-for-like sales rose by just 1.7% over the 16 weeks to January 3, whilst European sales declined by 5.7%.
The company stated: “Overall, Primark’s sales growth in the period was below our previous expectations and we now expect Primark’s sales growth in the first half of 2026 to be in the low single digits.”
Furthermore, in a challenging trading environment, the conglomerate significantly increased markdowns to effectively manage inventory levels, which impacted profitability.
The conglomerate, which also runs a grocery business featuring brands such as Kingsmill, Twinings, and Ryvita, alongside sugar, ingredients and agriculture operations, announced it now anticipates annual group-wide underlying earnings to fall below the previous year’s figures.
George Weston, AB Foods’ chief executive, commented: “Primark has had a challenging start to the financial year, with a mixed performance.”
He added, “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.”
Weston noted, “In a challenging consumer environment, our focus is on factors within our control, including initiatives now underway in Europe aimed at improving performance.”
This news follows an announcement two months ago by AB Foods that it was initiating a comprehensive review across the group, which could potentially lead to Primark being spun off with its own stock market listing.
In November, Weston stated that this review could take up to two years.
In other news on Thursday, the Competition and Markets Authority announced it was launching a detailed investigation into AB Foods’s acquisition of bread brand Hovis from private equity firm Endless.
AB Foods revealed its purchase of the 135-year-old Hovis brand in August last year for an undisclosed sum, as part of a strategy to bolster its Allied Bakeries business.
The disappointing sales figures at Primark reveal the pressures facing retailers in the current market. As AB Foods grapples with its sluggish performance, strategic moves such as potential spin-offs could reshape the landscape of its operations, reflecting broader trends within the retail sector.
