Primark's sales growth slows in Christmas quarter

LONDON, Jan 23 (Reuters): Associated British Foods said underlying sales growth slowed at its Primark clothing business in the Christmas quarter, hurt by unseasonal warm weather at the start of the period.

The group also said on Tuesday it was monitoring the situation in the Red Sea but does not expect any significant disruption to its supply chain for now.

Primark's like-for-like sales rose 2.1 per cent in the 16 weeks to Jan. 6, its fiscal first quarter, a slowdown from growth of 8 per cent in the previous quarter. Primark's total sales were up 7.9 per cent.

"It was a tricky period," Finance Director Eoin Tonge told Reuters. "It started off very slowly with the weather and that impacted certain countries harder than others, particularly Spain where it was warmer for longer."

However, trading at Christmas was strong, especially in the UK, Tonge said, adding that the group had flagged a slowdown in underlying sales growth.

AB Foods said it was more confident Primark's adjusted operating profit margin would recover to over 10 per cent in its 2023/24 year, driven by a further improvement in the cost of the products it buys.

"This should insulate us well against potential additional costs of supply due to the disruption in the Red Sea should they arise," it said.