Primark owner ABF confirms plans to demerge retailer from food business
Associated British Foods has decided to push ahead with a demerger of Primark from its food business following a review of its group structure.
ABF said the move will result in each business benefiting from a board focused on its own industry and strategy, a clearer investment case for shareholders, and greater accountability to investors with a specific interest in either the food business or Primark.
Subscribe to TRBThe review was undertaken in consultation with Wittington Investments, ABF’s largest shareholder. ABF said Wittington supports the demerger and will maintain its majority ownership of both Primark and the food business following the split.
Michael McLintock, chair of ABF, said: “The board has now completed its in-depth review of the structure of ABF and has concluded that a demerger of Primark is the best way to maximise long-term returns for shareholders, reflecting Primark’s scale today and the need for a better understanding of the food business.
“The opportunities ahead for both Primark and FoodCo are considerable and the board firmly believes that each will thrive as an independent entity.”
ABF is anticipating that the demerger will take place before the end of 2027, subject to receipt of any necessary approvals and appropriate tax clearances. The separation is expected to be structured as a dividend demerger.
George Weston, chief executive of ABF, said: “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 FTSE100 pure play 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.”
The news came as ABF reported that Primark’s total sales rose by 2% in the 24 weeks to 28 February, with new store openings contributing 4% to growth.
UK like-for-like sales edged up 3% as the retailer gained market share despite a “difficult” retail environment. However, this was offset by a 5.6% decline in like-for-likes in Europe where ABF said consumer confidence was weak.
During the period, ABF significantly increased investment across product, marketing, digital and technology to drive growth in like-for-like sales.
Weston said: “Primark continued to make strong progress in re-energising its customer proposition in a difficult clothing market.
“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.”
Looking ahead, he added: “We are managing the impacts of the Middle East conflict. 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.”
