4 hours ago
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Faarea MasudBusiness reporter
Primark saw sales drop in the UK as people spent less at the budget retailer, its owner Associated British Foods (ABF) said.
In the year to September it saw a 3.1% fall in like-for-like sales compared with the year prior, which it said reflected weak consumer confidence that meant shoppers were spending less in stores.
The company said it expected the "subdued" retail market to impact Primark sales into 2026.
Across the entire business, which alongside Primark also owns food brands Twinings, Ovaltine and Ryvita, profits fell 13% to £1.4bn for the year and ABF said it was exploring splitting off the fast-fashion retailer and its foods brands into two separate businesses.
Chief executive George Weston said though he was "confident" for 2026, it depended on the "consumer environment" which was was "particularly unpredictable at the moment".
British shoppers have been tightening their belts amid rising prices on the UK high street, leading them to spend less on things like fashion and turning to even cheaper competitors such as Shein and Temu.
Inflation, the rate at which prices rise, has held stubbornly at 3.8% for the year to September. Although inflation is down from highs seen in 2022-2023, it remains above the Bank of England's target of 2%.
Randeep Somel, fund manager at M&G Investments told the Today programme the decline of Primark sales showed "the consumer is staying at home and seeing how the Budget goes at the end of this month".
Its fall in sales came despite good weather which usually increases the amount people spend in shops, said Aarin Chiekrie, an analyst at Hargreaves Lansdown.
He added that any growth at Primark was driven by it opening new stores, bucking the trend of other brands which are closing them.
The Associated British Foods boss said in a call after the financial results that there was a "working assumption" in ABF that a separation of Primark "is where we would like to get to", although no decision had been made.
Richard Hunter, head of markets at interactive investor, said Primark, which has 475 stores in 18 countries, had reached the size "where it requires laser focus to capitalise on its own growth prospects, particularly overseas where the brand is gaining some real traction".
He said Primark was the "jewel in the crown" of ABF but the outlook remains "unfavourable" with the "harmful effects of the previous Budget on the retail sector".
From April, staff became more expensive to hire as minimum wage rose and employer National Insurance contributions went up.
Chancellor Rachel Reeves is widely expected to raise taxes in the budget later this month, which could deepen Primark's woes.
The news comes as a series of casualties on the UK high street continue as the costs of maintaining bricks-and-mortar stores becomes too high amidst rising online competition and pressure on consumer spending.
Recent retail names that have had to close stores or enter administration include Bodycare, Claire's, and Pizza Hut which said it will be slashing the number of restaurants it operates.
