(qlmbusinessnews.com . Thu 11th Sep, 2025) London, UK —
How Inflation and the Threat of Unemployment Are Shaping Primark's Struggle for Sales Growth
Shares in the company behind Primark, Associated British Foods (ABF), experienced a sharp decline, dropping more than 10% following a warning about rising “consumer caution” due to inflationary pressures affecting the cost of living.
George Weston, Chief Executive of ABF, highlighted growing anxiety among people about inflation and the threat of unemployment. He described the current market conditions as “challenging”, noting that the broader economic uncertainties were prompting shoppers to be more frugal with their spending.
Analysts pointed to disappointing sales figures at the popular fast fashion chain as a primary cause for the downturn in the company's share value. Russ Mould, Investment Director at AJ Bell, pinpointed Primark's lacklustre performance, observing a mere 1% increase in sales over the six months leading up to September 13, alongside a reduction in profit margins.
Mould attributed this to the sluggish economic climate within the EU, where consumer caution remains evident, further amplified by competitive pressures from Chinese counterparts like Shein and Temu.
Speculation around significant tax increases in the upcoming autumn Budget has further unnerved the UK market. Economists have also warned of a potential global surge in inflation rates in the latter half of the year, which could particularly impact the UK, posing additional challenges for budget-friendly retailers.
Mould argued against the assumption that discount retailers would naturally benefit during tighter economic times, suggesting that competitive pricing alone does not guarantee sales success, as evidence by Primark's recent experiences.
He also contrasted European consumer spending with the US, where expenditure has been more resilient. Yet, he expressed concerns over the sustainability of this trend should unemployment rates climb and job opportunities dwindle in the US.
Alex Smith, from the consultancy firm Third Bridge, commented on the complicating factors of US tariffs for Primark's stateside operations, where the brand has enjoyed stronger sales than in Europe. With US President Donald Trump imposing higher trade import taxes to boost domestic manufacturing and increase tax revenues, Primark faces challenges due to its heavy reliance on Chinese imports.
Smith explained that alternatives to Chinese suppliers, such as those in Bangladesh, Vietnam, and South America, have not yet reached the scale or efficiency to replace China's role in Primark's supply chain. The fierce price competition from brands like Shein and Temu makes passing on cost increases to US consumers problematic.
Despite American customers responding well to new Primark stores, Smith noted the uneven nature of the expansion. Opening outlets in distant states like Florida and Ohio has significantly increased distribution costs across the US network, complicating logistics and leading to inconsistent demand across different regions.
This News Story is brought to you by QLM Business News, your Digital Media Channel.
Visit QLM businessnews.com for more business news stories. Also follow us on Facebook, X, and Youtube.
To help QLM Business News bring you more news stories like this, please like, share, and subscribe.
Unlock unparalleled business growth and effortlessly attract a stream of new customers through QLM Business News Sponsored Advertising. Elevate your brand's presence and captivate your target audience with precision. Visit QLMbusinessnews.com and click on “Advertise” to harness the power of strategic advertising. Don't miss this unparalleled opportunity to propel your business to new heights of success!
Disclaimer: All images presented herein are intended solely for illustrative purposes and may not accurately depict the true likeness of the subjects, objects, or individuals referenced in the accompanying news stories.
