Associated British Foods to add Primark home delivery

AB Foods shares fell 9.7% to 1,824p in London after the update, reflecting investor concern that weaker clothing and tea sales are feeding through to profits even as the company still expects full-year adjusted operating profit to come in line with previous guidance and adjusted earnings per share to be ahead. Primark now expects fourth-quarter sales growth of 2% and full-year sales growth of 2%, but like-for-like sales are forecast to fall 3% in the quarter and 2.6% over the year, underscoring the pressure from weather and a weak consumer backdrop in continental Europe.

The heatwave delayed demand for seasonal autumn ranges, while cooler weather late in the quarter improved trading, AB Foods said. In the UK, where Primark remains strongest, total sales are expected to rise 1% in the fourth quarter and 2% for the year, helped by the ongoing growth of Click & Collect. Continental Europe remains the weak spot, with sales expected to fall 1% in the quarter and like-for-like sales down about 4.3%.

For investors, the move to delivery is a strategic test of whether Primark can widen its customer reach and lift productivity without undermining margins. Chief executive George Weston said the company sees an “opportunity for incremental and profitable growth” from the channel, while also pointing to its “iconic value” campaign and further digital investment.

The broader business picture is mixed. Grocery growth is expected in the mid-single digits in the fourth quarter, but full-year adjusted operating profit is seen slightly below prior expectations after hot weather hit tea demand at Twinings. Sugar remains under pressure from lower European prices, higher gas costs and weaker UK beet yield expectations, with the unit’s 2026 loss now expected toward the top end of a GBP25 million to GBP60 million range.

AB Foods also said work on the planned Primark demerger is progressing and remains on track for completion in December 2027, keeping the longer-term separation story in play even as near-term trading weakens. The next catalyst is the group’s annual results on Nov. 3, when investors will look for more detail on Primark’s delivery economics, the Hovis integration and whether the consumer slowdown is easing.