LONDON – Shares in Primark’s parent Associated British Foods began a slow recovery following Thursday’s shock profit warning due to shrinking sales at the value retailer.
The shares were up 1.3 percent to 18.75 pounds in late morning trading on Friday, Jan. 9. after plunging more than 13 percent on Thursday. The drop came after ABF revealed Primark‘s sales were “below previous expectations” for the key holiday period.
ABF, a fashion-to-food giant controlled by the Weston family, said it now expects Primark’s sales growth in the first half of 2026 to be in the low single digits, adding that markdowns in the current “difficult” trading environment would impact profitability.
As a result, and with visibility on the second half still unclear, ABF said that group adjusted operating profit and adjusted earnings per share will be “below” last year. ABF plans to announce results for the 16 weeks to Jan. 3, which corresponds to its fiscal first quarter and the holiday trading period, on Thursday, Jan. 22.
Analysts had mixed opinions about the warning. RBC Capital Markets maintained its view that Primark offers a “solid space rollout story in Europe and the U.S., and remains the leading value player in the U.K. retail space, albeit its price perception appears to have risen in several markets.”
Jefferies maintained its “underperform” rating on the ABF shares, citing Primark’s “continued struggle for consumer relevance as competition for lower-end consumers remains fierce in the year ahead.”
The bank is also wary of Primark’s “reliance on the U.S. as a fuel for space growth. The [U.S.] market continues to see lower-income consumers struggle, and immigration policies bite.”
Louise Deglise-Favre, lead apparel analyst at data and analytics company Global Data, wrote that while international expansion remains an important growth lever, Primark cannot bank on new stores alone to drive growth.
She said Primark needs to “improve underlying consumer demand in order to remain competitive against strong players such as Shein and Zara in the long-term. Primark should invest in impactful marketing to better broadcast its strong value-for-money and fashion credentials.”
Primark in Concord Mills in North Carolina. The retailer has been expanding aggressively in the U.S. market.
Courtesy image
The sales decline comes at a tricky moment for ABF which is currently exploring a spin-off of Primark, its largest business which accounts for half of the group’s total revenues and more than 50 percent of its operating profits.
Until now, Primark had been on a growth and retail expansion streak, rolling out stores in the U.K., Europe and the U.S., and brokering franchise deals internationally.
As reported in November, ABF is considering separating Primark from the food businesses, which take in sugar, grocery and agricultural products, in order to unlock long-term value for shareholders.
The company has been working with Rothschild & Co., and in consultation with ABF’s largest shareholder, the Weston-owned Wittington Investments, which said it “remains committed to maintaining majority ownership” of Primark and the food businesses.
George Weston, chief executive officer of ABF, said the rationale for splitting Primark from food was simple.
The food business, he said, has historically been less well-understood by the financial markets than Primark, “yet it has a highly attractive portfolio, deep global expertise and much potential. Primark has an incredibly strong international brand, a powerful customer proposition and substantial growth opportunities. I am very excited by what we can deliver in the future for both food and Primark.”
ABF has said it will provide an update on the review “as soon as practicable.”
ABF is also hunting for a new Primark CEO after Paul Marchant stepped down in March following an “error of judgment” with regard to a woman in a social situation. ABF said that Marchant has since apologized to the woman, the ABF board, Primark colleagues and associates following a company investigation into the matter.
Eoin Tonge, ABF’s finance director, has been acting as interim CEO and working with the senior Primark management team and strategic advisory board. Joana Edwards, ABF’s group financial controller, is serving as interim ABF finance director.
After Marchant stepped down, Weston said he was “immensely disappointed” in the whole affair. “Acting responsibly is the only way to build and manage a business over the long term. Colleagues and others must be treated with respect and dignity. Our culture has to be, and is, bigger than any one individual,” he said.
