Primark issues profit warning as sales growth dips

Primark has issued a profit warning after sales growth fell “below expectations”, as the retailer now looks to reposition as a “value leader”.

In a trading update for the 16 weeks to 3 January, parent company Associated British Foods (ABF) reported Primark achieved 3% sales growth in the UK, with like-for-like sales growth of 1.7%. The retailer gained market share for the period, with particular success in womenswear, taking total sales up 1%.

ABF CEO George Weston admitted in a statement today (8 January) Primark has had “a challenging start to the financial year, with a mixed performance”. Group adjusted operating profit is now expected to be down on last year.

Primark has issued a profit warning after sales growth fell “below expectations”, as the retailer now looks to reposition as a “value leader”.

In a trading update for the 16 weeks to 3 January, parent company Associated British Foods (ABF) reported Primark achieved 3% sales growth in the UK, with like-for-like sales growth of 1.7%. The retailer gained market share for the period, with particular success in womenswear, taking total sales up 1%.

ABF CEO George Weston admitted in a statement today (8 January) Primark has had “a challenging start to the financial year, with a mixed performance”. Group adjusted operating profit is now expected to be down on last year.

According to the retailer, UK growth was driven by investments to “strengthen” the customer value proposition through an enhanced product offer, improving price perceptions and increasing digital customer engagement via click-and-collect – available in all 187 of Primark’s British stores.

Global store rollouts contributed 4% to sales growth in the period, including a franchise store in Kuwait. Yet within Europe, like-for-like sales declined 5.7% amid “weak” consumer confidence, coupled with a “volatile” retail environment in the US which “impacted consumer sentiment and footfall”.

Despite sales failing to meet expectations, Weston claimed the business is “making good progress” to deliver Primark’s medium and longer-term growth opportunities.

Customer engagement

In a call with investors today, CFO Joana Edwards said the retailer has been focusing on the value it offers customers in Europe, including digital initiatives, which should lead to “improved performance”.

Primark interim CEO Eoin Tonge attributed the European losses to “online competition” and explained “the future of direction of travel” is for the retailer to get “more digital into Europe”.

This follows digital being added to the chief customer officer remit with the appointment of Matt Houston in July, following the departure of former marketing boss Michelle McEttrick.

Click-and-collect hasn’t been rolled out in Europe yet as the business has focused on “improving” the product proposition and “getting more customer engagement”. However, Tonge feels “confident” the brand can “get back on the front foot” in Europe, including focused more on customer engagement.

He outlined specific issues that apply to different areas. For Spain and France, Tonge pointed to an issue of brand awareness, whereas for Italy it’s a question of scale and price perceptions are a wide-ranging issue across several countries.

“We need to get back on the front foot in relation to us being known for the sharpest on prices,” said Tonge.

In November, Tonge said Primark needed to up its focus on price and better communicate its position as the “original value disruptor” to re-engage consumers. Last year he also claimed the retailer’s recent marketing efforts had concentrated too much on fashion, including September’s ‘In Denim We Can’ ad – Primark’s first TV campaign.

On UK price perceptions, Tonge described Primark’s market share performance returning to “relatively consistent growth” over the past five months as a good indicator.

The interim CEO credited the success of Primark’s social-focused Major Finds initiative highlighting the month’s “must-have” womenswear items, which it is rolling out across Europe. The initiative “helps remind people” of the retailer’s price focus and is based around “selective pricing”, said Tonge, who reiterated the need for the brand to get back to “being a proper value leader”.

In the US, he explained it’s “going to be a very bumpy road”, with another 12 months of “volatility” expected.

Looking ahead to the first half of 2026, the group expects Primark sales growth to be in the low single digits. A decision on potentially splitting ABF’s retail and grocery businesses to focus on Primark as a standalone entity is still set to be made in April.