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(Sharecast News) - Associated British Foods is mulling a split of its Primark and food businesses under a review of its group structure currently underway, the company said on Tuesday.
Chief executive George Weston said the group's "unique and exceptional food business" - which owns the Kingsmill and Twining brands - had been "less well understood by the financial markets" than Primark but had what he described as a "highly attractive portfolio".
"Primark has an incredibly strong international brand, a powerful customer proposition, and substantial growth opportunities." he added.
AB Foods said it was in consultation with its biggest investor, the Weston family's Wittington Investments, which remained committed to maintaining majority ownership of both businesses. It current holds 59% of AB Foods.
The company added that Primark's adjusted operating profit margin is expected to be slightly below last year as it focused on investing in growth to drive sales after posting a 26% fall in profit to £1.4bn for the year to September 13 amid a subdued consumer environment. Revenues slipped by 3% to £19.4bn
Weston added that he expected the consumer environment to remain subdued for the budget UK retailer and the company was focused on strengthening its customer value proposition through "product offer, price and price perception, and digital customer engagement".
Sales at Primark rose 1% to £9.5bn. A 3% fall in sales at established UK and Irish stores was offset by 20% growth in the US and 2% growth in mainland Europe.
The company said sales were hit by "cautious consumer sentiment and the lack of a seasonal purchasing catalyst during mild autumn weather [last year]". It also highlighted that some Primark customers on lower incomes were cutting back on spending as higher energy and food bills ate into discretionary spending.
"Looking ahead, we are confident in the group outlook for 2026 although much depends on the consumer environment, which is particularly unpredictable at the moment," Weston said.
Reporting by Frank Prenesti for Sharecast.com
