Fashion chain Primark warns of ‘challenging’ trading in November

UK fast-fashion chain Primark faced “challenging” trading in November, the kick-off of the holiday shopping season, its parent Associated British Foods said on Friday.

ABF, the fashion-to-sugar conglomerate, cited the “tough retail market” in Britain, which has suffered from cautious consumers and intense competition in pricing. It said, however, that “with careful inventory management and improved margins, our expectation for the increase in Primark profit is unchanged.”

The group, which derives around 60 per cent of its overall operating profits from Primark, relies on its retail arm to drive earnings growth amid persistent weakness in its sugar business. Primark’s like for like UK sales rose 1.2 per cent in its latest fiscal year, which ran to September 15. Its operating margin also ticked up to 11.3 per cent from 10.4 per cent a year earlier.

Primark’s retail expansion will continue and ABF expects an increase in retail profit for the current financial year, the group said on Friday.