Primark owner Associated British Foods has maintained its warning that annual profits will fall this year, despite sales growth at the value fashion retailer.
The group said it continued to expect adjusted operating profit and adjusted earnings per share for 2026 to be below last year, as worsening conditions in its sugar business offset steadier trading elsewhere.
AB Foods reported flat group revenue on a constant currency basis in its third quarter, with retail sales up three per cent as Primark’s store expansion helped offset weaker like-for-like trading.
Primark sales rose three per cent over the period, supported by new stores in Europe, the US and the Middle East. However, like-for-like sales fell 2.2 per cent as the retailer continued to face a difficult consumer backdrop across most markets.
In the UK, Primark sales rose one per cent in the quarter, with like-for-like trading broadly flat. The retailer said it continued to gain market share in a declining clothing market, helped by a sharper focus on price, product and marketing.
The business said a strong start to spring/summer trading in March was followed by weaker sales in April and May, which it attributed to lower consumer sentiment following the Middle East conflict and unseasonal weather. Trading improved in June as the weather picked up.
Primark’s sales in continental Europe fell one per cent, while like-for-like sales dropped 3.6 per cent as consumer confidence remained weak. The retailer said it had launched initiatives to strengthen value perception, improve in-store execution and increase digital marketing across the region.
US sales rose 16 per cent during the quarter, helped by three new store openings, taking Primark’s estate in the market to 41 stores. Its first Manhattan store, which opened in May, had “started strongly”, the company said.
AB Foods said there was no change to Primark’s guidance for the year, with the retailer still expected to deliver an adjusted operating profit margin of around 10 per cent.
However, the group’s sugar business weighed on the wider outlook. Sugar sales fell four per cent in the quarter, reflecting lower average selling prices in Europe, lower volumes in Africa and higher imports in South Africa.
AB Foods said the duration and severity of the Middle East conflict had pushed up gas price expectations for next year, hitting its European sugar profit outlook.
The group now expects its sugar division to post an adjusted operating loss of between £25m and £60m in the 2026 financial year.
It also warned the result could deteriorate further in 2027, depending on European sugar prices, energy, fuel and fertiliser costs, production levels in Africa, El Niño weather impacts and currency movements.
AB Foods said its full-year outlook was unchanged outside sugar, with grocery revenue up one per cent and ingredients revenue up three per cent in the quarter.
The group also said it remained on track to demerge Primark from its food business before the end of 2027.
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