Shares in Associated British Foods fell more than 9% in early London trading on Wednesday after the Anglo-South African conglomerate reported a muted fourth quarter for Primark and warned of a significantly wider sugar division loss next year.
Primark’s like-for-like sales are projected to decline 3% in the quarter to September 12, dragged down by a 4.3% drop in continental Europe that offset a modest 0.4% rise in the U.K. and Ireland. U.S. sales posted a brighter 11% gain as the retailer expanded to 47 stores across the country. Full-year total sales are expected to grow roughly 2%, with new store openings and the franchise model contributing approximately 5 percentage points. Adjusted operating margin for the channel is forecast at about 10%.
Jefferies analysts described the result as a "muted end to the year" for Primark, citing underwhelming European sales, and called the group’s forward guidance a "downbeat outlook for the stock."
In its food businesses, AB Foods said grocery adjusted operating profit will come in slightly below prior guidance, weighed by weaker Twinings tea demand amid prolonged hot weather. Looking ahead to 2027, the company expects grocery profit to edge above 2026 levels despite a one-off charge from consolidating recently acquired Hovis. The ingredients segment is expected to meet prior expectations, while agriculture profit should track previous guidance this year and improve in 2027.
The most notable downward revision came from the sugar division. For 2026, AB Foods guided toward the higher end of its £25 million to £60 million adjusted operating loss range, citing increased onerous contract provisions driven by low European sugar prices and elevated gas costs. The outlook for 2027 was far bleaker: the company forecast a much wider adjusted operating loss of £70 million to £170 million, pointing to higher gas costs and adverse weather impacts in Africa.
On the strategic front, Primark confirmed plans to launch home delivery in Great Britain, supported by a newly acquired automated fulfilment facility in Sheffield. Operations in the Gulf region performed strongly and are set to expand into Saudi Arabia and Mexico.
Full-year adjusted operating profit for the 2025–26 period is expected to land broadly in line with market expectations, with adjusted earnings per share anticipated to come in ahead of forecasts. AB Foods’ full-year results are scheduled for release on November 3. The planned demerger of its retail business from food remains on track for completion in December 2027.
