Primark Owner ABF Tumbles After Slashing Profit Forecast on Weak European Sales

Associated British Foods, the owner of Primark, warned that weak clothing sales in continental Europe would hit annual profits, sending its shares tumbling more than 10%.

In a trading update on Thursday, the food and retail conglomerate said it now expects adjusted operating profit and adjusted earnings per share to be lower than last year’s figures. The company had previously forecast that profits would rise.

The announcement comes just two months after the company said it was considering a demerger of the fast-fashion business from the wider group.

ABF reported that Primark’s UK sales grew 1.7% in the 16 weeks to January 3, a stark contrast to a 5.7% decline in continental Europe, which accounts for 49% of the retailer’s total sales.

“Overall, Primark’s sales growth in this period was lower than our previous forecasts and we now expect that Primark’s sales growth in the first half of 2026 will be low, single-digit,” ABF stated. “In a challenging trading environment, we significantly increased discounts to effectively manage inventory levels, which affected profitability.”

The London-listed group said that if current sales trends at Primark continue into the second half, it anticipates a full-year adjusted operating profit margin of around 10% “as we continue to invest in growth.”

The group also pointed to weak sales in its U.S. food division, where the impact of persistent consumer weakness was “more pronounced than expected” in its cooking oils and bakery ingredients segments. Shares fell 11.4% in early trading in London.

In November, ABF announced it was exploring a separation of Primark from its food arm as part of a strategic review. George Weston, the chief executive, said at the time that “financial markets will better understand the food business if Primark is separated into a standalone listed business,” adding, “There is a realistic possibility that this will happen.”

ABF’s lower-profile food division includes grocery, ingredients, and agricultural products. Primark has been forced to contend with growing competition from Chinese fast-fashion rivals Shein and Temu. The review could take up to two years and is “not a done deal,” Weston said in November.

Separately, the UK’s Competition and Markets Authority said Thursday it is referring the proposed merger of ABF’s bakery unit with rival Hovis for a more in-depth investigation.