Primark owner Associated British Foods has seen its shares slump after warning over profits as sales across the discount clothing chain disappointed in “difficult” Christmas trading.
Shares in the group were 12% lower in early trading on Thursday as AB Foods revealed Primark sales edged around 1.7% higher like-for-like in the UK over the 16 weeks to January 3 and fell 5.7% across Europe.
The group said: “Overall, Primark’s sales growth in the period was below our previous expectations and we now expect Primark’s sales growth in the first half of 2026 to be in the low single digits.
“In a difficult trading environment, we significantly increased markdowns to manage inventory levels effectively, which impacted profitability.”
The group – which also operates a grocery business with brands including Kingsmill and Twinings and Ryvita, as well as sugar, ingredients and agriculture divisions – said it now expects annual group-wide underlying earnings to be below the previous year.
George Weston, chief executive of AB Foods, said: “Primark has had a challenging start to the financial year, with a mixed performance.
“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.
“In a challenging consumer environment, our focus is on factors within our control, including initiatives now under way in Europe aimed at improving performance.”
It comes two months after AB Foods announced it was launching a group-wide review that could see Primark spun off with a separate stock market listing.
Mr Weston said in November the review could take up to two years.
Separately on Thursday, the Competition and Markets Authority said it was launching an in-depth probe into AB Foods’s deal to buy bread brand Hovis from private equity firm Endless.
AB Foods announced the deal to buy 135-year-old Hovis in August last year for an undisclosed sum in a move to boost its Allied Bakeries business.
This article was written by Holly Williams from The Independent and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.