Global ops drive Primark in H1, despite home market weakness

Primark parent Associated British Foods delivered its first-half results on Tuesday and while its revenue fell 2% to £9.5 billion, Primark itself managed to stay positive on a constant currency (CC) basis — but only just.

Revenue for the Primark business in the 24 weeks to 1 March was £4.472 billion. That was down 1% at actual exchange rates but rose 1% CC, with a weaker performance in its largest market, the UK and Ireland, having a negative impact (more of that later).

But adjusted operating profit increased 6% actual and 8% CC to £540 million, while the adjusted operating profit margin increase to 12.1% from 11.3%.

Growth markets

The company said that Primark’s Key growth markets, the US, Spain, Portugal, France, Italy, and Central and Eastern Europe, “delivered good growth, underpinned by our strong customer value proposition and the successful execution of our store rollout programme”. 

In the UK and Ireland, sales declined, despite good like-for-like sales growth over the key Christmas trading period. 

Across its markets, store rollouts contributed 4% to total sales growth in H1 2025 and total like-for-like sales declined 2.5%. It added that as expected, “in our fastest-growing markets such as the US, Italy and France, like-for-like metrics were impacted by the high number of recent store openings”.

Looking at its regions in more detail the company said that Spain and Portugal, which account for 18% of total sales, saw 8% growth in the first half with good underlying numbers in both markets and a strong contribution from recently opened stores. 

France and Italy account for 16% of sales and saw 4% sales growth, driven by recent store openings. Meanwhile Central and Eastern Europe saw 21% sales growth but accounted for only 3% of sales. This reflected a strong contribution from new stores so that total sales percentage could increase in forthcoming periods.

The US makes up 5% of Primark sales at present and saw 17% growth this time. During H1 it opened two new stores, including its first in Texas, to reach 29 stores in total with an additional 18 leases signed. Initiatives to drive increased brand awareness in the US, included a 12-week trial marketing campaign in the New York metro area during the period.

Northern Europe (Germany, the Netherlands, Belgium and Austria) makes up 12% of sales and saw 1% growth. But like-for-like sales grew 2.4%. Strong growth in Germany and the Netherlands reflected the restructuring of its store footprint, which has driven much-improved sales densities and profitability. Growth in Germany also reflected the prior year impact of industry-wide strike action.

UK and Ireland weakness

Unfortunately the 4% dip in the UK and Ireland made a bigger impact because the region accounts for 46% of total sales. The UK clothing retail market declined in the period, reflecting cautious consumer sentiment and a lack of seasonal purchasing catalyst in the autumn months due to mild weather. 

Shopping activity within elements of its customer base “was particularly weak and as a result Primark’s market share reduced from 6.9% to 6.7%”. 

But its online participation through Click & Collect is “building momentum as we increase customer awareness and make more of our product ranges available to more customers, particularly those who shop in smaller stores”. It also had a sales uplift from active management of its UK store estate, including store relocations, extensions, new store openings and an ongoing store refurbishment programme. Excluding the benefit from changes to the store estate, like-for-like sales in the UK and Ireland declined 6%.

Operating model strength

 
The growth in adjusted operating profit and the adjusted operating margin showed “the strength of Primark’s operating model”. The improvement in gross margin was primarily due to “favourable foreign exchange, supplier efficiencies and the effective management of markdowns”. The company said focused cost management and the phasing of one-off items more than offset wage inflation and increased investment in product, digital and brand initiatives. This investment will continue over the medium term, alongside a continued focus on driving cost optimisation and efficiencies in our supply chain, store operating model and central costs.

Looking ahead, it has “a clear roadmap for new store rollouts in our growth markets and we are targeting that these will contribute around 4% to 5% to Primark’s total annual sales growth for the foreseeable future”. In addition, it’s making good progress with its franchise agreement with the Alshaya Group to enter the Gulf Cooperation Council markets and “expect to announce the opening of new stores in the region soon”.