Shares in Associated British Foods (AB Foods) fell sharply on Thursday after the company warned of weaker trading at its Primark fashion business and higher losses in its sugar division.
AB Foods shares dropped by more than 11% during early trading, before closing down about 7.9% at £18.60.
Primark, which is owned by AB Foods, expects its like-for-like sales to fall by about 3% in the fourth quarter to September 12. While sales in the UK and Ireland are expected to increase slightly, trading in continental Europe remains difficult, with customers spending less.
The company also warned that its sugar business could record a much larger loss in the 2026-27 financial year. AB Foods expects the division’s adjusted operating loss to reach between £70 million and £170 million, compared with a projected loss of £25 million to £60 million for the current financial year. Higher gas costs, currency movements, weather conditions and production levels in Africa are among the factors affecting the business.
Despite the challenges, Primark is making a major change to its business strategy. The retailer plans to introduce home delivery across Great Britain, ending its long-standing policy of offering only physical stores and Click & Collect. AB Foods has acquired a highly automated fulfilment centre in Sheffield for £90 million to support the service.
The company is also preparing to separate Primark from its food businesses. The planned demerger is expected to be completed by December 2027, creating separate businesses focused on fashion retail and food production.
The latest results show the pressure facing major retailers and food producers as consumers become more cautious while energy, production and other operating costs remain high.
