AB Foods shares tumble 11% after Primark sales miss
AB Foods stock fell over 11% after Primark warned of weaker like-for-like sales and the group flagged Sugar losses near the top of prior guidance.
Shares in Associated British Foods dropped more than 11% on Thursday after the company reported weaker trading at Primark and a worse outlook for its Sugar division. Primark’s like-for-like sales are expected to fall 3% in the fourth quarter to Sept. 12, after a 2.2% decline in the previous quarter, and to drop 2.6% for the full fiscal year. Total Primark sales are forecast to rise about 2% for the quarter and the year, driven by new store openings including locations in the United States, while sales at existing stores have not broadly recovered.
Chief Executive George Weston noted that efforts to improve Primark’s product offer have accelerated, with the UK and womenswear categories outperforming. He described trading in continental Europe as challenging and at an earlier stage of improvement.
Market analysts reacted negatively to the update. Mark Crouch, a market analyst at eToro, said the stock move reflected that the retailer’s recovery remains unproven. Analysts at Jefferies described the trading update as a downbeat outlook, citing weak sales in Europe and a muted end to the year for Primark.
AB Foods now expects its Sugar division to report an adjusted operating loss toward the upper end of its prior guidance range of £25 million to £60 million for fiscal 2026. The company pointed to provisions for onerous contracts, weak sugar prices in Europe, higher gas costs and reduced expectations for the UK beet crop. For 2027 the Sugar unit’s adjusted operating loss is projected to widen to between £70 million and £170 million, with higher gas costs and weather risks in parts of Africa identified as factors.
Other parts of the group showed mixed trends. Grocery sales are forecast to increase in the mid-single digits in the fourth quarter, Ingredients revenue to rise about 10%, and Agriculture to decline in the mid-single digits. At group level, AB Foods expects adjusted operating profit to be broadly in line with prior expectations and adjusted earnings per share for fiscal 2026 to come in ahead of earlier forecasts.
The company has bought an automated fulfilment centre in Sheffield to enable home delivery in Great Britain, building on Primark’s click-and-collect service. The firm expects home delivery to be introduced in the future and described the change as an expansion of Primark’s digital capabilities. Mark Crouch called the addition appropriate but added it would not alter near-term holiday trading.
AB Foods plans to separate Primark from its food businesses in a demerger targeted for completion by December 2027. Analysts have estimated Primark’s standalone value at up to about £9 billion and the food business at around £4 billion, a split intended to allow investors to value the two businesses independently.
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