Associated British Foods (ABF) Stock Plunges 9% on Weak Primark Performance

Key Highlights

• Primark’s like-for-like sales projected to decline 3% during the fourth quarter, with continental Europe experiencing a 4.3% drop
• Shares of ABF plummeted more than 9% during early Thursday trading in London
• Sugar division’s adjusted operating loss for fiscal 2027 projected between £70 million and £170 million
• Annual adjusted earnings per share now anticipated to exceed prior projections
• Primark plans to roll out home delivery across Great Britain, while the retail-food business split stays scheduled for December 2027

Associated British Foods stock plunged over 9% during Thursday’s early London trading session following a fourth-quarter trading statement revealing Primark’s like-for-like sales are projected to decline 3% in the period concluding September 12.

Shares were changing hands at approximately 1,854p, significantly beneath the 52-week peak of 2,351p.

Associated British Foods plc, ASBFY

The most significant deterioration occurred in continental Europe, where like-for-like sales tumbled 4.3%. While the UK and Ireland posted a slight 0.4% increase, this modest gain proved insufficient to counterbalance the overall weakness.

Analysts at Jefferies were notably critical, characterizing the performance as “a muted end to the year for Primark led by underwhelming Europe sales” and labeling the company’s forward guidance as “a downbeat outlook for the stock this morning.”

Notwithstanding the like-for-like sales contraction, Primark’s overall revenue is still anticipated to expand approximately 2% for the complete fiscal year. Fresh store launches and franchise operations delivered roughly 5% growth contribution. Primark’s adjusted operating margin remains on course to reach about 10%.

The American market emerged as a positive highlight. Revenue climbed approximately 11% during the quarter as Primark’s footprint extended to 47 locations nationwide. Franchise ventures in the Gulf region also delivered solid results, with expansion initiatives planned for Saudi Arabia and Mexico.

Food Division Compounds Challenges

In the Food segment, Grocery adjusted operating profit is anticipated to fall marginally short of earlier guidance. Subdued demand for Twinings tea, attributed to a prolonged period of elevated temperatures, was identified as the primary headwind.

Sugar is now tracking toward the upper boundary of its £25 million to £60 million adjusted operating loss projection for 2026, influenced by elevated natural gas expenses and depressed European sugar pricing. Ingredients profitability is expected to align with previous forecasts.

Extending the outlook into 2027, ABF provided a conservative preliminary perspective. The Sugar division’s adjusted operating loss is projected in a significantly broader range of £70 million to £170 million, with management citing potential challenges including escalating gas costs and climate-related impacts across Africa.

Grocery profitability is anticipated to marginally surpass 2026 levels, notwithstanding a one-time impact from integrating the recently purchased Hovis business. Agriculture earnings are expected to demonstrate year-over-year improvement.

Broader Market Context

ABF’s stock wasn’t alone in facing difficulties Thursday. The FTSE 100 declined to a seven-week minimum as intensifying U.S.-Iran geopolitical tensions propelled Brent crude beyond $100 per barrel, introducing additional macroeconomic challenges alongside ABF’s company-specific pressures.

Annual adjusted earnings per share are now projected to surpass earlier guidance, providing a modest counterbalance to the otherwise pessimistic messaging.

The organization verified plans to introduce Primark home delivery services throughout Great Britain, supported by a recently procured automated distribution center in Sheffield.

The anticipated separation of the Retail operations from the Food division continues progressing toward completion in December 2027.

Complete annual results are slated for release on November 3.