The performance could also cast doubt on any timing of a proposal to spin-off Primark into a separately-listed business. Primark, which trades as Penneys in Ireland, has its headquarters in Dublin.
Shares in Associated British Foods (ABF) plunged as much as 12pc at one stage in London after it published a trading update that covered the Christmas period.
“Primark has had a challenging start to the financial year, with a mixed performance,” said ABF chief executive George Weston.
Sales growth at Primark in the 16 weeks to January 3 was below the group’s previous expectations. It now expects the chain’s sales growth in the first half of the 2026 financial year to be in a low-single digit range.
Primark was forced to significantly increase markdowns to effectively manage inventory levels, which impacted profitability.
It warned that if Primark’s current sales trends were to continue in the second half of its financial year, then its adjusted operating profit margin for the full year will be approximately 10pc, similar to the first half, as it continues to “invest in growth”. In the first half of the 2025 financial year, it had notched up a non-recurring benefit to profit of £20m (€23m), however.
The UK and Ireland account for 45pc of Primark’s sales, with continental Europe accounting for 49pc. The United States makes up the remaining 6pc.
In the UK, Primark delivered sales growth of around 3pc in the trading period, with like-for-like sales growth of around 1.7pc in what it said was a difficult clothing market, particularly over Christmas. Primark gained market share in the period.
In continental Europe, Primark’s like-for-like sales declined around 5.7pc in the period. In the US, the retail environment was volatile, which impacted consumer sentiment and footfall. ABF said that consumer confidence in mainland Europe remains weak.
Primark’s store roll-out programme continued across markets and contributed around 4pc to sales growth in the period, including the first store opening in Kuwait through its franchise model. That contribution to sales growth was as anticipated.
“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,” warned Mr Weston. “In a challenging consumer environment, our focus is on factors within our control, including initiatives now underway in Europe aimed at improving performance.”
Penneys was founded in Dublin in 1969. Photo: Getty
Today’s News in 90 Seconds, Thursday, January 8
He said that ABF is making “good progress” to deliver Primark’s medium and longer-term growth opportunities.
Primark is the biggest part of the ABF stable, accounting for £9.5bn of its £19.5bn group revenue in the 12 months to the middle of September last year. But more significantly, it generated £1.1bn of ABF’s total £1.7bn in adjusted operating profit.
Last November, ABF said it is considering spinning off Primark into what would be a separate business on the stock market, with analysts reckoning it could be valued at about €15bn.
ABF’s other businesses are a mix of agricultural and food-ingredients arms, and a raft of grocery brands from Ryvita and Ovaltine to Patak’s and Jordans.