Primark owner Associated British Foods delivered a trading update for its full business on Thursday and said revenue at its retail division is expected to be up around 4% in H2. The second half ends on 14 September.

The numbers have been driven by a strong sales contribution from new locations, but comparable — or like‐for‐like (LFL) — sales are expected to fall by around 0.5% in the second half as a whole.

Q3 was up by a tiny 0.2% LFL, but the company is expecting a decline of around 0.9% in the almost-complete Q4. 

It said this “primarily reflects unfavourable weather in the UK and Ireland in H2, which resulted in lower footfall and particularly impacted sales of our seasonal lines in womenswear and footwear”.

But while volumes were soft during H2, it added that “the average selling price increased as a result of mix. We are benefiting from the relevance and breadth of our product ranges, including licensing and collaborations, as well as increased digital engagement with our customers. Markdown in the period has been managed effectively and we expect to exit the year with good inventory levels”.

In the UK, H2 sales are expected to be around 0.5% lower, with like‐for‐like sales down 2%. That divides into a 0.6% drop in Q3 and 3.1% in Q4, the “challenging weather, particularly in April and June” taking a big share of the blame. 

And Primark’s market share based on Kantar figures fell slightly to 6.5% in the 24 weeks to 21 July 2024 reflecting the lower high street footfall. 

In Europe excluding the UK, sales growth is expected to be around 5% in H2, with a strong contribution from space expansion. Most markets in Europe delivered strong growth, including Spain, France and Italy. 

LFL sales growth is expected to be around 0.9%, with +1.1% in Q3 and +0.7% in Q4. 

Most countries traded well with good LFL performances, “although the like‐for‐like sales measure in France and Italy was impacted by the high number of store openings in the prior year”. 

Germany and the Netherlands “both performed particularly well,” we’re told, but Ireland struggled in the same way as the UK did due to poor weather.

The firm said it continues to “make good progress” in the US. Sales growth is expected to be a massive 25% in H2. 

Recently opened stores are performing well and it opened three new ones in the period. It also launched its first US marketing campaign in the New York area.

The company also expects further international growth to come as it has signed an agreement with the Alshaya Group to explore the opportunity to open stores in the Gulf Cooperation Council (GCC) markets.

Despite the sluggish second half, the retailer’s outlook for adjusted operating profit fin FY24 is unchanged. Its margin delivery has been strong in H2 and it expects the adjusted operating profit margin for the full year to be a little over 11.5%. 

The big year-on-year margin recovery in H2 was largely due to lower material costs, reduced freight costs and foreign exchange improvement. But the benefits were partly offset by labour cost inflation and increased investments.