Primark is looking at a spin off – it’s 10 years too late
Associated British Foods (ABF) has announced that it is considering spinning off Primark from the rest of its food business, which includes brands like Twinings, Ovaltine, and Ryvita.
In its final results on Tuesday (4 November), the group said that it expects the consumer environment to remain subdued and that it remains focused on strengthening its customer value proposition through our product offer, price, and price perception, and digital customer engagement with a view to driving like-for-like sales.
“We have made good progress in the UK and Ireland, and we have plans to roll out similar initiatives in all of our other markets. Our store rollout programme continues in Europe, the US, and through our franchise model and is expected to contribute around 4% to sales growth in 2026.”
It added that the adjusted operating profit margin is expected to be slightly below last year’s underlying adjusted operating profit margin, as it focuses on investing in growth.
10 years too late
ABF’s announcement that it is looking to spin off Primark probably comes about 10 years too late, says Chris Beckett, Consumer Staples Analyst at Quilter Cheviot.
“This isn’t to say that Primark is a bad business, it remains a stalwart of UK and European high streets, but it isn’t exactly knocking it out of the park just now. The consumer backdrop is weak at the moment, and this is resulting in meagre growth.
“This contrasts strongly to its glory days in the 2010s, when it appeared it could do no wrong. The market appears to agree, driving ABF shares down despite the fact it should help remove the conglomerate discount it currently receives,” he said.
For ABF itself, the market reaction suggests investors don’t much like the remaining business either, particularly as a result of its exposure to commodity prices.
Its latest results paint a mixed picture and 2025 is looking like it will be a bit of a nothing year for ABF – little growth but nothing glaringly bad to point out.
The news today shows how difficult it is for consumer companies right now, with a difficult economic backdrop, said Beckett.
“The fact that a business as strong as Primark is failing to excite investors suggests that retail is a difficult place to operate and is showing no signs of getting any easier.
“ABF arguably got lucky with Primark, but now that business has matured, it may not have realised that much of the value has already been created.”
