Primark profits fall as parent ABF presses button on demerger

ABF, which has been considering the separation of Primark from its food business for several months, revealed that the demerger will take place by the end of this calendar year. 

ABF, whose shareholders will have shares in the two listed businesses, said that it was confident in the long-term prospects of both. However, in tough retail conditions, Primark posted an adjusted operating profit of £471m in the first half – down 14% on the previous year.  Sales rose 2% to £4.65bn.

New stores contributed 4% to Primark’s growth, “with good execution across our key growth markets in Europe and the US”. Like for likes slipped 2.7%.

In the UK, Primark achieved sales growth of 3%, and like-for-like sales were ahead 1.3% with the retailer winning market share “in a declining market”.

In continental Europe, sales slipped 1% and like for likes fell 5.6%. 

As retailers face additional costs and a hit to consumer sentiment amid conflict in the Middle East, ABF said that at Primark, “an encouraging start to spring/summer trading in March was followed by softer trading in April, as we started to see the impact of the Middle East conflict on the consumer.”

But it maintained: “Given what we know today, we expect the cost consequences in 2026 to be manageable. However, there is a risk to Primark sales if the conflict persists and consumer spending deteriorates. Our strong balance sheet underpins the Group’s resilience.”.”

ABF chief executive George Weston said that in the first half, “Primark continued to make strong progress in re-energising its customer proposition in a difficult clothing market”.

He observed: “Our actions in the UK since the autumn drove like-for-like sales growth and market share gains. Whilst trading in Europe was weak, the initiatives and investments to improve performance are underway. Primark continued to invest in stores and digital capabilities across all its markets to deliver its ambitious growth opportunities over the medium and long term.”

He said of the demerger: “This is an important step in the evolution of ABF. For our food business, the separation will enable greater understanding of the breadth and strength of our differentiated portfolio and its long-term growth opportunities as the only FTSE 100 pureplay food producer.

“For Primark, it enables the creation of appropriate governance to maximise the future potential offered by Primark’s powerful brand, strong customer proposition and opportunities in existing and new markets.”