Poor weather adds to 'challenging' environment for Penneys and Primark

Parent company AB Foods plans to spin off the fashion business from its food businesses

The parent company of Penneys and Primark, Associated British Foods, said revenue at the clothing retailer increased 3% to £2.92bn for the quarter to June 20, but poor weather and the war in Iran added to a "challenging" retail environment. Picture: Denis Minihane.

The parent company of Penneys and Primark, Associated British Foods, said revenue at the clothing retailer increased 3% to £2.92bn for the quarter to June 20, but poor weather and the war in Iran added to a "challenging" retail environment. 

AB Foods said a strong start to Primark's spring/summer trading in March was followed by weaker trading in April and May, "largely due to the impact of the Middle East conflict on consumer sentiment and unseasonal weather. Improved weather in June contributed to stronger trading." 

"In a challenging consumer environment across most of our markets, we continued to strengthen our customer proposition including an improved product offer, a sharper focus on price and price perception, and increased investment in marketing and digital customer engagement," the company said.

New stores contributed 5% to growth. In the US, sales grew 16%, with three new store openings includiung a first store in Manhattan, to reach 41 in total. Primark's franchise business, which comprises three stores in Dubai and one store in Kuwait, performed strongly, despite the market backdrop.

"There is no change to our guidance for 2026. In a challenging consumer environment, including the impact of the Middle East conflict, we continue to expect Primark to deliver an adjusted operating profit margin for the full year of approximately 10%. We are making good progress in re-energising Primark’s customer proposition, including increased investment in initiatives to drive like-for-like sales growth and enhance our technology capabilities," the company trading statement said.

Lucy Slinger.

Last month, Primark announced the appointment of Lucy Slinger as chief financial officer and she will join the group in September.

AB Foods confirmed in April it will spin off its Penneys/Primark fashion business from its food businesses. AB Foods said it remained on track for the Penneys-Primark demerger to become effective before the end of 2027. 

Primark contributes over half of AB Foods' profit. Overall, AB Foods said total group revenues grew by 3% to £5.3bn (€6.18bn), compared with the same period a year earlier. AB Foods warned that its sugar business would be loss-making for at least two more years, as higher gas prices linked to the conflict in the Middle East added to pressure on the struggling division. The group expects an adjusted operating loss for sugar of £25m (€29m) to £60m (€69m) in its 2025/26 year and a further deterioration in 2026/27.

Additional reporting by Reuters