1st Jul 2026 09:01
(Alliance News) - Associated British Foods PLC on Wednesday reported a continuing decline in comparable sales at fast fashion chain Primark in its third quarter and a deteriorating outlook at its sugar business.
The London-based food, ingredients and retail group said group revenue rose 3% to GBP5.30 billion in the third quarter, and was in line at constant currency.
AB Foods' third quarter refers to the 16-week period to June 20 for Primark and to the 12-week period to May 23 for its food businesses.
The FTSE 100 listing owns food brands such as Twinings tea, Kingsmill bakery, Jordans cereals and Mazola cooking oils, as well as Primark.
Retail revenue grew 4% to GBP2.92 billion in the quarter, and Grocery revenue increased 5% to GBP1.04 billion. Ingredients revenue climbed 7% at GBP543 million and Sugar revenue rose 4% to GBP451 million. Agriculture revenue dropped 13% to GBP347 million.
Shares in the firm traded 2.6% lower at 1,934.00 pence each on Wednesday morning, the worst performing stock on London's FTSE 100 which was up 0.1%.
At Primark, like-for-like sales were down 2.2% in the quarter, an improvement on the 2.7% drop reported in the first six months of the financial year, and are 2.5% lower in the year-to-date.
UK and Ireland LFL sales at Primark eased 0.2%, with Europe down 3.6%.
In the UK, a strong start to spring/summer trading in March was followed by weaker trading in April and May, largely due to the impact of the Middle East conflict on consumer sentiment and unseasonal weather. Improved weather in June contributed to stronger trading.
In Europe, consumer confidence remains weak, AB Foods said.
Chief Executive George Weston says: "While the retail environment remained challenging in most markets, Primark continued to strengthen its customer proposition, including new product launches, a sharper focus on price and increased investment in marketing, particularly digital. We are making good progress and there is more to come."
AB Foods said its full-year outlook is unchanged with the exception of its sugar business
"We continue to expect group adjusted operating profit and adjusted EPS in 2026 to be below last year," it said.
In the 52 weeks to September 13, 2025, AB Foods reported adjusted operating profit of GBP1.73 billion and adjusted EPS of 174.9p.
AB Foods now expects Sugar to deliver an adjusted operating loss in the range of GBP25 million to GBP60 million in the 2026 financial year compared to market consensus for a GBP22 million loss cited by Citigroup.
The firm had already lowered its guidance for the sugar business in April when it said it expected an adjusted operating loss in 2026 compared to projections of a small adjusted operating profit previously.
In Sugar, the duration and severity of the Middle East conflict have increased gas price expectations for next year, which has impacted the European profit outlook, AB Foods explained.
Looking ahead to the 2027 financial year, current expectation is for a further deterioration in the Sugar result from the GBP60 million operating loss at the upper end of the range in 2026.
"The performance of our Sugar business continues to be a priority area of focus for management and the board. We expect to take further action to lower our cost base going forward, particularly in Europe," the company said.
AB Foods says it remains on track for the previously announced demerger of the Retail business from its Food business to complete before the end of 2027.
Meanwhile, Lucy Slinger, who will become Primark's chief financial officer, will join Primark in September.
By Jeremy Cutler, Alliance News reporter
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