Primark’s top line performance will likely be weighed down by Europe, with sales densities in Europe still way short of pre-pandemic levels. With few signs that the ongoing energy crisis in Europe is abating, we have little faith that performance there is about to turn around any time soon. But UK’s recovery is encouraging with the gap (in sales densities relative to pre-pandemic levels) now narrowing. Pleasingly, management has highlighted that it has not ceded market share since the pandemic despite lacking online presence. The roll out of a Click & Collect service could be a significant development and will no doubt, in our view, remedy unfulfilled demand – thereby generating incremental sales. But new headwinds are materialising from elevated energy costs - now c.2.5% of Primark’s sales versus 0.5% pre-crisis - while the recent dollar appreciation threatens to weigh on margins for some time. We estimate that 75% of FY23’s dollar requirements were bought forward at levels around $1.22 implying that FX headwinds could endure into FY24, if current spot rates do not recover. While management would not rule out margins returning to prior levels (12% to 13%), energy costs would still need to fall back down to pre-crisis levels for this scenario to emerge. Food business: Following successful pricing action this year, we expect profits next year to continue to be driven by the sugar business, with higher World sugar prices benefitting top line growth. Forecasts: Despite assuming higher sales growth going forward – owing to pricing action - we bring our PBT forecasts closer in line with consensus for this year, downgrading them by 8%, and by 19.5%/14% in FY23E/FY24E – predominately reflecting lower operating margins in the Primark business. Our TP declines to 1445p on the back of said changes (lower assumed outer year margins), and an increased WACC reflecting higher market risk and inflation.