ABF considers spinning off Primark
Consumer goods giant ABF is considering selling off fashion brand Primark as it undertakes a ‘comprehensive review’ of the business.
ABF, which founded Primark – then known as Pennies – in Dublin in 1969, said that “no decision” has been taken yet.
The strategic review will be carried out with the help of the advisory firm Rothschild & Co, with the backing of its largest shareholder, the Weston family’s Wittington Investments.
The FTSE 100 company said the family, which owns 59 per cent of ABF, remained “committed to maintaining majority ownership of both businesses”.
Primark has faced pressure from low consumer spending, inflation and energy costs in recent years, with a 3.5 per cent drop in like-for-like sales in 2025.
“Lower sales [earlier in the year] reflected a decline in the UK clothing retail market and particularly weak shopping activity in elements of Primark’s customer base,” ABF said.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, described Primark’s current challenges as cyclical.
“[A spin-off] would likely be beneficial to the valuation in the long run but given the current cyclical challenges at Primark and the Food businesses, it’s unlikely to happen in the next year.”
ABF’s share price dropped 1.67 per cent in early trades.
Sugar prices cause woes
Overall revenue at ABF decreased one per cent to £19bn in the year to September 13, while operating profit fell 12 per cent to £1.73bn.
Sales in ABF’s sugar division, which accounts for around 10 per cent of revenue, fell by 10 per cent year on year and the arm made an operating loss of £2m.
Profitability in the UK and Spain dropped “significantly” this year as a result of persistently low European sugar prices and the high cost of beet, while droughts in Zambia and South Africa affected production.
Earlier this year, ABF decided to close its Vivergo bioethanol plant after the UK Government decided “not to provide the regulatory and financial solution required for Vivergo to operate”, it said.
CEO George Weston said that ABF has been navigating a “challenging external backdrop”.
“Looking ahead, we are confident in the Group outlook for 2026 although much depends on the consumer environment, which is particularly unpredictable at the moment.”
“The balance sheet remains in decent shape though and should help ABF to weather the storm until sugar prices pick back up,” Chiekrie said.
“That’s weighing on the group’s valuation, which is sitting well below the long-run average on a price-to-earnings basis. That could mark an attractive entry point, but potential investors will need plenty of patience.”