Primark sales growth slows, impacting ABF stock

Associated British Foods (ABF) has published a trading update for the second half of its financial year, which concludes on September 13, 2025. Following the company's cautious outlook, its shares experienced a sharp decline in London trading. According to The Wall Street Journal, the stock plunged by as much as 12 percent—to its lowest price in five months—in a reaction to what analysts described as a weaker-than-expected performance from its retail division, Primark.

The company anticipates "modest sales growth" of approximately 1 percent for Primark. This growth is being driven by strong performance in the UK and US, which is being offset by softer trading conditions in continental Europe. This guarded forecast, combined with a decline in like-for-like sales, appears to have unsettled investors.

However, according to CEO George Weston, the company has performed well despite a challenging environment marked by consumer caution and geopolitical uncertainty. He noted that Primark, the company's retail arm, showed improved trading in the UK and strong sales growth in the US, while other food businesses met expectations.

Primark's like-for-like sales are anticipated to be down by about 2 percent for the half-year. In other markets, sales in Spain and Portugal are expected to grow by around 2 percent, with new store openings contributing to a strong performance against a weaker market. In contrast, sales in France and Italy are projected to decrease by 4 percent due to a softer consumer environment. Sales in Central and Eastern Europe are expected to increase by 9 percent due to recent store openings, while Northern Europe is projected to see a 2 percent decline. In the US, sales are expected to jump by 23 percent in the second half of the year, driven by the company's value proposition and the opening of four new stores.

Primark continued to expand and optimise its store portfolio, opening 15 new stores across the globe, including its first store in Tennessee, US. The company is also preparing to open its first franchise stores in the Middle East, with an opening in Kuwait in October 2025 and two stores in Dubai in early 2026.