Consumer caution dampens Primark results as owner ABF reports profits hit

Group revenue was down 2% at £9.5 billion ($12.7 billion), and adjusted profit before tax was also down 10% from £911 million ($1.2 billion) the previous year to £818 million ($1.09 billion). 

Across the Group, Primark U.K. and Ireland constitutes the largest single business, where sales were down 4% at £2.1 billion ($2.8 billion). However, growth both in the U.S. and in Europe was strong, with the U.S. reporting a 17% growth in sales and Central and Eastern Europe reporting growth of 22%.

Despite the disappointing results from the U.K. and Ireland business, Primark remained resilient, with growth achieved notably across Spain, Portugal, and France. This contributed to overall Primark sales being up 1% at £4.5 billion ($6 billion), with adjusted operating profit increasing 8% to £540 million ($723 billion).

George Weston, Chief Executive of ABF, said, “Primark delivered good growth in Europe and the U.S., with continued consumer caution in the U.K. Primark’s profit and margin delivery was strong, and our low-cost operating model is working well”.

Looking ahead, ABF continues to target low-single digit sales growth for the full year in its Primark business, driven by a store rollout programme in the growth markets across Europe and the U.S. The Group reported that the retail outlook in the U.K. remains challenging and forecast adjusted operating profit margin in 2025 to be broadly in line with last year.

The recent leadership changes at Primark have been well-documented, and it remains to be seen whether this will have an unsettling effect on the business. However, plans for further strengthening the customer proposition appear sound, with the roll-out of click and collect in the U.K. scheduled for completion by June 2025, a planned investment in digital customer engagement, and a focus on improving the in-store experience all pointing to Primark being on the right course.

The store plans also include continuing to roll out self-checkout, which Weston has gone on record as saying will improve the customer experience and reduce labor costs.

The planned review of the de minimis rule, which currently exempts goods valued at £135 ($179.65) or less, including textiles, from customs duties upon entering the U.K. will also be welcome news for Primark, addressing a loophole which the likes of Shein and Temu have latterly exploited.

Whilst the U.S., Europe, and a planned franchise operation in the Middle East through a partnership with Alshaya Group all suggest there are strong opportunities for growth, the performance and challenges in the UK market will be cause for concern.