“The Group has continued to perform well in the second half, delivering good topline growth, a significant improvement in profitability and excellent cash generation. While the British weather was not in Primark’s favour this summer, robust growth in other markets and new store openings have driven good sales overall. Strong margin delivery is enabling increased investment in our product, digital and brand initiatives”, commented George Weston, Chief Executive of Associated British Foods (ABF), the parent company of Primark.

Trading Update

According to ABF’s latest trading update, Primark’s revenue for the second half of the year, which ends on the 14^th of September, is expected to be up by 4% on the same period of last year. In particular, like-for-like sales are expected to decrease by around 0.5% in this period, with a growth of 0.2% in the third quarter and a projected decline of around 0.9% in the fourth quarter. This trend “primarily reflects unfavourable weather in the UK and Ireland”, “which resulted in lower footfall and particularly impacted sales of our seasonal lines in womenswear and footwear”, reads the statement.

In the second half of the year, sales in the UK are expected to be around 0.5% lower than in the same period in 2023, with like-for-like sales expected to decline by around 2.0% (including a like-for-like decline of 0.6% in the third quarter and a projected decline of around 3.1% in the fourth quarter) year-on-year. The company opened two new stores in the country, extending two existing stores and relocating two stores during the period.  

In the rest of Europe, sales growth in the second half of the year is expected to be around 5% against the same period of the prior, with strong performances in most markets, including Spain, France and Italy. In particular, like-for-like sales growth is expected to be around 0.9%, with growth of 1.1% in the third quarter and expected growth of around 0.7% in the final quarter. Ireland was the exception, due to the weather conditions mentioned above.

Primark continues to make good progress in the US and expects a sales growth of 25% year-on-year in the second half. As well as opening three new stores in the period, the fashion retailer also launched its first US marketing campaign in the New York area, “as we focus on driving increased brand awareness with US customers”.

Overall, full year adjusted operating profit for Primark remains, but the adjusted operating profit margin for the full year is now expected to be a little over 11.5%.

“The significant margin recovery in H2 FY24 compared to H2 FY23 reflects an increase in product gross margin, largely due to lower material costs, reduced realised freight costs and foreign exchange improvement”. However, “these benefits are being partially offset by labour cost inflation and increased investment in digital and data capabilities, technology and brand marketing”, pointed out ABF.