Primark reports on tough trading in the run up to Christmas

BUDGET FASHION chain Primark has warned that trading in the run-up to Christmas has been challenging as it reported tough trading in November.

Despite this, the chain said it should increase profits thanks to careful inventory management and improved margins.

Parent firm Associated British Foods (ABF) said that Primark’s expansion will continue. The update on Primark added to evidence of a slowdown in British consumer spending in the runup to Brexit.

Retailers had been hoping for some festive cheer over the critical Christmas trading period, the high street’s busiest time of year, following a poor 2018.

Several big names including House of Fraser, Toys R Us and Maplin have gone bust, with scores of other retailers enacting store closure programmes.

Last month, ABF reported that like-for-like sales at Primark fell 2.1 per cent in the year to September as bad weather weighed on trading in Europe.

In grocery, it expects an improvement in profit from a margin increase in its Australian and UK businesses, but profits at the firm’s sugar unit will be significantly lower, reflecting the effect of EU sugar prices.

The group also warned that sterling is expected to be “volatile given a period of intense Brexit negotiations”, but is not currently anticipating any impact.

Analyst Robert Waldschmidt at Liberum said: “Sales and profit for the first eight weeks of trading for the group were in line with expectations. Primark trading was challenging in November, but the group’s expectations for an increase in Primark profit is unchanged given careful inventory management and improved margins.”