Associated British Foods (ABF.L) is set to update investors on its fourth-quarter trading performance on Thursday, with all eyes on Primark’s summer sales momentum.
Primark made headlines in July when it announced price reductions on hundreds of fashion items, a move the retailer said “reaffirms its place as the home of great value fashion.”
The budget fashion chain is the only retail brand within ABF’s broader portfolio, which also encompasses significant food, sugar, and agriculture operations.
Despite its diverse operations, Primark generates the highest revenues of any division across the group, making its performance a critical indicator for the business overall.
Analysts are watching closely to see whether the retailer’s price-cutting strategy has successfully translated into stronger like-for-like sales growth during the summer trading period.
Russ Mould and Danni Hewson, analysts for AJ Bell, said: “After a challenging year, investors will be hoping for a sprinkling of good news driven by a boost in late summer clothing sales and the approval of the Hovis acquisition.”
They added that the plans to spin off Primark by the end of 2027 mark a “monumental shift in strategy” for the bosses and will be watched closely to see whether it fetches a strong valuation or trades at a discount.
ABF confirmed in July that it expects to report lower profits this financial year compared to last, following higher gas costs linked to the Middle East conflict, which has weighed heavily on its sugar plants.
The company is now anticipating an adjusted operating loss for its sugar division as a result of those elevated energy costs, adding further pressure on the broader group’s financial performance.
ABF owns Silver Spoon, along with grocery brands including Kingsmill, Twinings, Jordans, Patak’s, and Hovis, which was added to the portfolio through a recent acquisition.
Aarin Chiekrie, equity analyst for Hargreaves Lansdown, said ABF’s next update is expected to show a “relatively underwhelming” financial performance across the group.
“The key Primark business is forecast to deliver around 2% sales growth in the second half, despite a challenging retail environment, particularly for low-income consumers across the UK and Europe,” he said.
“This comes as continued like-for-like declines in its existing stores are expected to be offset by momentum in the US and growth from new store openings,” Chiekrie added.
ABF is preparing to separate Primark from its food business and list it on the FTSE 100 as a standalone entity by the end of 2027, a move that analysts say will be scrutinised for its valuation outcome.
With UK household costs continuing to rise, Primark’s renewed focus on affordability could prove timely, though whether it has materially shifted consumer behaviour remains to be seen on Thursday.