Primark Christmas quarter sales down 2.7% amid plans for new Irish store 

Trading update casts a shadow over the AB Foods' plans to separate Primark from its food business

The new store in Cavan town will be the retailer's 39th store in the Republic of Ireland. Picture: PA

Penneys and Primark owner Associated British (AB) Foods, which warned on profit earlier this month, confirmed on Thursday that underlying sales at its Primark clothing business fell by 2.7% in the Christmas quarter.

When AB Foods issued its profit warning in early January, it published sales estimates for the 16 weeks to January 3, with final figures being published on Thursday.

The warning, which sent AB Foods' shares down 14%, was due to weaker-than-expected Primark sales and subdued demand in the United States for its cooking oils and bakery ingredients.

It cast a shadow over the group's plans to separate Primark from its food business, which includes grocery brands such as Ovaltine, Ryvita and Twinings, as well as major sugar, agriculture and ingredients units.

The group said in November it was conducting a review of its structure and hoped to decide by April, when first-half results are reported. However, CEO George Weston said the "working assumption" was a separation would happen.

It comes as Penneys continues an ambitious expansion across Ireland, with the clothing retailer announcing a new Irish store on Thursday.

The new store in Cavan town will be the retailer's 39th store in the Republic of Ireland.

It is also part of Primark’s commitment to invest over €250m in Ireland over a ten-year period, which also includes the development, relocation and refurbishment of many of its existing stores across the country, including Penneys’ stores in Portlaoise, Dooradoyle in Limerick and Ennis later this year.  

Additional reporting from Reuters.