Primark's third quarter like-for-like sales fell 2.2% as the Iran war and unseasonal UK spring weather hit consumer sentiment, AB Foods said in a trading statement on Wednesday. Shares in the company were down almost 4% on the news.
Sugar revenue fell 4% on a combination of lower average selling prices in Europe, volume declines in Tanzania and the impact of higher imports in South Africa. The US-Israeli war on Iran and Lebanon had also increased gas price expectations for next year.
It forecast an adjusted operating loss for sugar of £25m - £60m for fiscal 2025/26 year and "a further deterioration" in 2026/27. "We expect to take further action to lower our cost base going forward, particularly in Europe," it said.
Overall Primark sales for the 16 weeks to June 20 rose 3% and were up 2% in the year to date. In the UK, total sales were up 1%, with like-for-like sales broadly flat, although the discount clothing chain continued to gain market share in a market that declined in the period.
“A strong start to our spring/summer trading in March was followed by weaker trading in April and May, largely due to the impact of the Middle East conflict on consumer sentiment and unseasonal weather. Improved weather in June contributed to stronger trading,” it added.
In continental Europe, where consumer confidence remained weak, total sales fell 1% and like-for-like sales declined 3.6%. In the US, trading continued to be mixed in the period as sales grew 16%, with three new store openings to reach 41 in total.
The company in April confirmed it planned to demerge Primark from its food operations and list both entities in London.
Analysts were on average forecasting full-year adjusted operating profit of £1.55bn down from the £1.73bn in 2024/25.
Reporting by Frank Prenesti for Sharecast.com