Ab Foods plummets in London; Primark focuses on online sales to stem the decline in turnover

(Il Sole 24 Ore Radiocor) - Associated British Foods shares plummeted on the London Stock Exchange following the announcement that like-for-like sales at Primark, its clothing retail subsidiary, are expected to fall by 3 per cent in the fourth quarter ending 12 September. Investors also appeared unconvinced by Primark’s new home delivery service, which has led the group to purchase a logistics centre for 90 million pounds.

In an update on the company’s performance, Ab Foods announced that the estimated 0.4 per cent increase in sales at Primark – which it plans to spin off next year – in the UK and Ireland did not offset the 4.3 per cent decline recorded in continental Europe in the fourth quarter, the results for which will be published on 3 November. The British group also stated that it expects adjusted operating profit for the 2025–2026 financial year to be broadly in line with previous forecasts, with adjusted earnings per share exceeding initial estimates. For Primark, “our priority areas – the UK and women’s clothing – continued to outperform other markets and categories. Business conditions in continental Europe remained challenging, where initiatives to strengthen our value proposition for customers are at an early stage,” said CEO George Weston.

“Both the Food and Ingredients sectors recorded solid growth during the quarter, although the prolonged heatwave in the UK and across Europe had an impact on demand for Twinings tea. “Whilst several factors contribute to our negative outlook for sugar in 2027, the recent positive turnaround in prices in Europe and globally should provide a boost in the coming years,” added the CEO.

Ab Foods has also announced that Primark will soon be offering a home delivery service in the UK. Although Primark already offers a Click & Collect service in the country, the retailer has long been reluctant to introduce a home delivery service, considering it unprofitable given its low prices. “Primark’s digital maturity, including the success of Click & Collect, combined with the evolution of the online market, now presents an opportunity for profitable growth through the home delivery channel,” Ab Foods explained in a statement. To this end, Primark has acquired a highly automated fulfilment centre in Sheffield, in the north of England, from Boohoo for £90 million. The company stated that the process of spinning off Primark from its food business is progressing well and is expected to be completed by December 2027. “ABF’s fourth-quarter results show a disappointing end to the year for Primark, mainly due to disappointing sales in Europe,” commented analysts at Jefferies in a note.