ABF says it could separate Primark and food business
Associated British Foods has announced that it is considering separating Primark from its food business.
In its annual results statement, the group said: “The board of ABF has been conducting a review of the group structure with a view to maximising long-term value.
“Although no decision has been taken, the outcome of this review may lead to the board deciding to undertake a separation of the Primark and food businesses.”
The news comes at ABF reported a 13% decline in adjusted operating profit to £1.7 billion in the year to 13 September.
In the UK and Ireland, Primark sales declined by 1% and by 3.1% on a like-for-like basis. Lower sales in the first half of the year were followed by a sequential improvement in the second, which ABF attributed to a stronger product offering, particularly in womenswear, and increased digital engagement.
In Europe sales edged up 2%, with like-for-like sales down 1.5%, although US sales limbed by 20% driven by new store openings.
Meanwhile, Primark’s adjusted operating profit rose by 2% to £1.1 billion.
George Weston, ABF chief executive, said: “This was a year of intense strategic and operational activity within ABF. Most of our businesses delivered robust financial results, while navigating a challenging external backdrop.
“Primark’s improved UK trading in the second half was encouraging and reflects renewed focus on our value proposition, a stronger product offer and enhanced digital capabilities.
“We have more to do in some of Primark’s European markets and there are plans in place. Significant white space remains as Primark continues its store expansion in existing and new markets and through franchise opportunities.”
Speaking of the potential separation of the food and retail businesses, he added: “I fully support the board’s review of the group structure and will be closely involved in the process and any outcome.
“Our unique and exceptional Food business has historically been less well understood by the financial markets than Primark, yet it has a highly attractive portfolio, deep global expertise and much potential. Primark has an incredibly strong international brand, a powerful customer proposition, and substantial growth opportunities.”
