British conglomerate Associated British Foods (ABF) has announced a concrete plan to spin off its Primark retail division from its food operations. This was preceded by a comprehensive strategic review that was initiated in November 2025. As the group announced on Tuesday, the spin-off should be completed before the end of the 2027 calendar year. ABF’s largest shareholder, Wittington Investments, supports the plan and intends to retain a majority stake in both companies.
The group’s board of directors justified the plan by saying that after the separation, the management teams of the two companies could concentrate more specifically on the specific industry dynamics and strategic priorities. ABF Chairman Michael McLintock explained that this move is the best way to maximize long-term returns for shareholders. The plan reflects Primark’s current size and offers a clearer investment perspective for the grocery business.
Following the completion of the separation, George Weston will remain CEO of the food business, which will retain the name Associated British Foods Plc. Eoin Tonge has been appointed CEO of Primark.
ABF reports a “challenging half-year”
In addition to its future plans, the group also presented the results for the 24-week period before February 28th. Accordingly, the group of companies experienced a challenging first half of the year. Sales in the Primark retail segment grew by four percent (currency-adjusted +2 percent) to 4.7 billion British pounds (5.3 billion euros), but the operating profit adjusted for special items fell by 13 percent to 471 million British pounds.
Primark’s adjusted operating margin fell to 10.1 percent from 12.1 percent in the same period last year. The company cited higher discounts and increased investment in digital initiatives and technology.
Like-for-like sales at Primark fell by 2.7 percent. The retailer in Great Britain was able to defy the difficult conditions and achieve an increase of 1.3 percent. This increased the market share to seven percent.
In contrast, business in continental Europe remained weak. Like-for-like sales there fell by 5.6 percent. According to the parent company, the causes were low consumer confidence and a difficult retail environment, especially in Germany. The US market remained a growth driver. Sales rose by twelve percent after the opening of five new branches.
At group level, ABF’s sales remained largely stable at just under 9.5 billion British pounds. Adjusted for currency effects, it shrank by two percent. Adjusted operating profit fell by 17 percent to 691 million British pounds. This was mainly due to significant losses in the sugar segment and the expected decline in retail margins. Adjusted earnings per share fell 15 percent to 70.7 British pence.
The company is trying to mitigate the consequences of the Middle East conflict
The start of the spring-summer season was “encouraging” in March, management explained, but business weakened in April as the effects of the Middle East conflict began to weigh on consumers.
The group is currently concerned with dealing with the effects of the crisis in the Middle East. The conflict led to increasing volatility in energy and freight prices. CEO Weston emphasized that the cost impact for 2026 is expected to be manageable. However, there is a risk to Primark’s sales if consumer spending continues to decline. For now, management is sticking to its outlook for Primark. An adjusted operating margin of around ten percent is still expected for the year as a whole.
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