Primark owner profit dips as UK sales fall amid inflation squeeze
Associated British Foods (ABF), which owns Primark, said sales had fallen in the UK as people spent less at the affordable retailer.
The year to September saw a 3.1% decline in comparable sales compared to the previous year; This reflected weak consumer confidence, which meant shoppers were spending less in stores.
The company said it expects a “subdued” retail market to impact Primark sales into 2026.
Profits across the business, which owns Primark as well as food brands Twinings, Ovaltine and Ryvita, fell 13% to £1.4bn for the year, and ABF said it was exploring splitting the fast fashion retailer and food brands into two separate businesses.
Chief executive George Weston said he was “confident” for 2026 but that this depended on the “consumer environment” which was “particularly unpredictable at the moment”.
British shoppers are tightening their belts against rising prices on Britain’s high street, leading them to spend less on things like fashion and turn to cheaper rivals such as Shein and Temu.
Inflation, the rate at which prices rise, remained stubbornly at 3.8% throughout the year until September. Although inflation is lower than the highs seen in 2022-2023, it remains above the Bank of England’s 2% target.
Randeep Somel, fund manager at M&G Investments, told the Today programme that the drop in Primark sales showed “the consumer is staying at home and seeing how the Budget goes at the end of this month”.
The boss of Associated British Foods said in a phone call after the financial results that there was a “working assumption” at the ABF that Primark’s separation was “where we want to go”, but no decision had been made.
Richard Hunter, head of markets at the interactive investor, said Primark, which has 475 stores in 18 countries, had “reached a size that requires intense focus to capitalize on its own growth prospects, particularly abroad where the brand has gained real traction”.
He said Primark was the ABF’s “jewel in the crown” but the outlook remained “negative” due to the “detrimental effects of the previous Budget on the retail sector”.
Staff recruitment has become more expensive since April due to the increase in the minimum wage and the increase in employers’ National Insurance premiums.
Chancellor Rachel Reeves is expected to increase taxes in the budget later this month.
The news comes as a spate of casualties continue on Britain’s high street as the cost of maintaining brick-and-mortar stores has skyrocketed amid increased online competition and pressure on consumer spending.
The latest retail names forced to close stores or enter administration include: body care, Claire’sAnd pizza hut He said he would reduce the number of restaurants he operates.
