Wet weather in Britain hit fashion business Primark’s summer sales, but better performance elsewhere kept operating profits steady, owner Associated British Foods (ABF) said on Thursday.
Shares in the group opened 4 per cent lower on Thursday.
Primark, which operates as Penneys in Ireland and has stores across Europe and in the United States, said underlying sales would fall by 2 per cent in Britain in the six months to mid-September due to “challenging weather,” particularly in April and June. Across Europe, excluding Britain, however it expected underlying sales growth of 0.9 per cent for the six-month period.
Despite the difficulties in Britain, where it said it lost market share to online rivals as fewer people visited shops in wet conditions, full-year operating profits would be unchanged, with margins higher than last year due to lower material costs and freight costs. The company forecast Primark’s full-year adjusted operating margin would be just over 11.5 per cent.
“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,” ABF’s chief executive George Weston said. “April and June in particular were pretty awful trading months.”
He said British shoppers were still nervous, citing higher interest rates and potentially the fear of tax rises to come from the UK’s new Labour government.
Looking to 2025, the company said it expected Primark to deliver good sales growth with an adjusted operating margin in line with this year’s level.
The company also said sugar profitability would be lower than guided in its financial year ending this month, and would fall to between £50 million (€59.3m) and £75 million next year. The forecast is about a quarter of the size expected by consensus estimates, according to Bloomberg Intelligence’s Charles Allen.
An oversupply of sugar in Europe has knocked prices even more than the company anticipated just two months ago, Mr Weston said in an interview. Still, the effect would be short-lived, and prices should recover into 2026. “We’re processing an agricultural commodity. There’s inevitably volatility in the markets for those sorts of products.”
The company said it completed a £500 million buyback programme last month, and would purchase a further £100 million of stock in the coming weeks.
– Reuters, Bloomberg
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