Primark to separate from Associated British Foods by 2027

UK-based diversified group Associated British Foods (ABF) has announced a definitive plan to demerge its retail business, Primark, from its food operations. The decision follows an in-depth strategic review initiated in November 2025 and is intended to be completed before the end of the 2027 calendar year. The demerger is supported by ABF’s largest shareholder, Wittington Investments, which intends to maintain majority ownership of both entities.

The board believes the separation will allow both businesses to be overseen by boards directly aligned with their specific industry dynamics and strategic priorities. ABF chairman Michael McLintock stated that the move is the best way to maximise long-term returns for shareholders, reflecting the current scale of Primark and providing a clearer investment proposition for the food business.

On completion, George Weston will serve as the chief executive officer of FoodCo, which will retain the Associated British Foods plc name, while Eoin Tonge has been appointed as the CEO of Primark.

ABF announces Primark demerger following interim results

The announcement coincided with interim results for the 24 weeks ended February 28, 2026, which showed a challenging first half for the group. Retail segment revenue grew by 2 percent to 4.7 billion pounds (6.35 billion dollars), though adjusted operating profit fell 14 percent at constant currency to 471 million pounds. Primark's adjusted operating margin decreased to 10.1 percent from 12.1 percent in the prior year as the company managed higher markdowns and increased investment in digital and technology initiatives. Like-for-like (LFL) sales declined by 2.7 percent globally during the period.

In the UK, Primark demonstrated resilience in a difficult market, delivering LFL sales growth of 1.3 percent and increasing its market share to 7 percent. This performance was attributed to a re-energised customer proposition, including the ‘Major Finds’ value initiative and the expansion of the nationwide click and collect service. Conversely, trading in continental Europe remained weak with LFL sales declining 5.6 percent, impacted by low consumer confidence and a difficult retail environment, particularly in Germany. The US market remained a growth driver, with sales increasing 12 percent following the opening of five new stores.

At a group level, revenue decreased 2 percent at constant currency to 9.5 billion pounds. Adjusted operating profit declined 18 percent to 691 million pounds, largely due to significant losses in the sugar segment and the expected decline in retail margins. Adjusted earnings per share fell 15.4 percent to 70.7p.

Outlook and impact of Middle Eastern conflict

Looking ahead to the spring/summer 2026 (SS26) season, management reported an encouraging start in March, though trading softened in April as the impact of the Middle East conflict began to affect consumers. The group continues to target "white space" growth of 4 percent to 5 percent per annum through new store rollouts for the foreseeable future. For the full year, ABF maintains its outlook for Primark, with an expected adjusted operating profit margin of approximately 10 percent.

The group is currently managing the impacts of the Middle East conflict, which has caused volatility in energy and freight prices. While Weston noted that the cost consequences for 2026 are expected to be manageable, there remains a risk to Primark sales if consumer spending further deteriorates.