The short version: Primark’s adjusted operating profit fell 12 per cent to £1.01bn in the year to 12 September, and its margin slipped from 11.9 to 10.2 per cent. Permanent price cuts on staples bought volume but cost profit — a clear sign of how hard the cheapest end of the high street is being squeezed.
Associated British Foods (ABF), the London-listed group that owns Primark, reported annual results on 3 November covering the 52 weeks to 12 September 2026. Primark’s revenue rose 2 per cent at constant currency to £9.82bn, according to FashionUnited’s report on the results, but new stores supplied five percentage points of that growth. Strip the new space out and existing stores sold less: like-for-like sales fell 2.6 per cent.
Profit fell faster than sales. Adjusted operating profit dropped 12 per cent at constant currency to £1.01bn, and the adjusted operating margin narrowed to 10.2 per cent from 11.9 per cent a year earlier. Across the whole of ABF, which also runs grocery, sugar and ingredients businesses, adjusted operating profit fell 14 per cent to £1.51bn, the group’s results announcement shows. George Weston, ABF’s chief executive, said the company remains “on track to complete the demerger of Primark from AB Foods in December 2027.”
The numbers behind the drop
Continental Europe is where Primark is losing ground. The region accounts for 47 per cent of retail sales, and there sales fell 1 per cent with like-for-like sales down 4.7 per cent, FashionUnited reported. The UK, at 39 per cent of sales, grew revenue 2 per cent with like-for-likes up 0.5 per cent and a 6.9 per cent share of the clothing, footwear and accessories market.
The United States is the bright spot. Revenue there rose 13 per cent and Primark opened 14 stores, taking its American estate to 47. The company also invested £576m in capital spending during the year. For the year ahead, it guides to an adjusted operating margin of about 10 per cent, with new stores adding roughly four percentage points to sales growth.
Why the margin moved: cheaper staples, by design
The margin fell partly because Primark chose to charge less. In July it launched Iconic Value, a permanent price cut of up to 29 per cent on hundreds of bestselling adult and childrenswear lines across its 19 markets, TheIndustry.fashion reported at the time. A women’s boyfriend pyjama set went from £17 to £13; cotton-rich jeans were set at £9 and menswear hoodies from £9.
Primark framed the move around shoppers. Matt Houston, its chief customer officer, said then that “value matters to customers today more than ever.” The competitive logic was plainer. As the retail analyst Natalie Berg told the BBC, Shein sells dresses for around £3 online, without the rent, staff and stock of close to 500 physical stores. Primark answered on price, and the 1.7-point drop in margin is part of the bill.
This sits inside a wider pattern at the bottom of the market. Shein’s own first-quarter results in July showed revenue up only 1.1 per cent and a net loss, and the UK has just moved to make large marketplaces collect VAT for overseas sellers, which Faz covered in our piece on the UK Budget’s marketplace VAT rule. The race to the lowest shelf price is getting more expensive for everyone running it.
The Faz read: a £9 jean has to come from somewhere
It is worth being honest about what a price cut at this end of the market does. A retailer selling £9 jeans has very few levers left once rents, wages and freight are paid. It can accept a thinner margin, as Primark has this year. It can lean on suppliers. Or it can spend less on the garment itself: lighter fabric, more synthetic blend, simpler construction. Primark has pledged to keep investing in quality, fit and durability, and the results give no evidence it has cut corners. But a shopper has no way to see the trade-offs from the shop floor except through the label and the hand of the cloth.
The other lesson is about where growth now comes from. Primark’s sales still rose, but only because it opened more shops. Existing stores sold less in Europe even after prices fell. That is a sign that cheaper is no longer a sufficient reason for many shoppers to buy more — a shift Faz has tracked through the steady rise of secondhand, from eBay to The RealReal.
What it means if you buy at this end of the market
A lower price on a staple is only a saving if the piece lasts. The useful test is cost per wear: a £9 pair of jeans worn twenty times before it bags at the knee costs more per wear than a £90 pair worn three hundred times. Three checks help before you buy.
One. Read the composition label. A cotton-rich jean with a small elastane share will stretch out faster than one with a denser weave and less stretch; our guide to reading a clothing composition label explains what the percentages tell you. Two. Check the seams and the hem. Tight, even stitching and finished inside seams are signs that construction wasn’t the first thing cut. Three. Ask whether you need the piece at all. Basics are where the four better channels — vintage and estate, independent makers, accessible luxury, and selective mainstream luxury — often beat the high street on value over time; the mid-tier mass market is the one worth skipping.
Prices may not stay where they are, either. Tariffs and duties are rising across Primark’s markets, and duty costs reach the price tag with a multiplier. A retailer guiding to a 10 per cent margin has little room left to absorb more.
What happens next
Primark expects an adjusted operating margin of about 10 per cent in the financial year to September 2027, with continued US expansion. ABF has said group adjusted operating profit for 2027 will be lower than in 2026. The separation of Primark into its own listed company is scheduled for December 2027, at which point Primark will have to justify its value on its own numbers rather than as part of a food conglomerate. Christmas trading will be the next test, and Europe’s like-for-like trend the figure to watch.
The honest takeaway
Primark has shown that it can still sell more clothes by opening more shops and cutting prices. It has not shown that cheaper staples bring shoppers back to existing stores in Europe, and the cost of trying is visible in a margin that has fallen to around 10 per cent. For the person buying, the takeaway is simple: a lower price tag is not the same as better value. Judge the garment, not the discount.
The next move is yours.
Sources: Associated British Foods annual results announcement, 3 November 2026 · FashionUnited · TheIndustry.fashion on Iconic Value
