Associated British Foods reports mixed performance amid UK retail challenges

Associated British Foods plc has reported its latest trading figures for the 16 weeks to 4 January 2025, revealing a challenging period for its UK retail operations despite growth in other markets. 

Slowing sales in AB Food’s retail business will be a cause for concern for investors given it accounts for around 45% of group revenue.

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The group’s overall revenue declined by 2.2% at actual currency rates, though it showed a modest 0.5% increase at constant currency.

Primark, the group’s retail division, experienced a notable downturn in its UK and Irish markets, with sales falling by 4% and like-for-like sales dropping by 6.4% in the UK. This decline was attributed to cautious consumer sentiment and unusually mild autumn weather affecting seasonal purchases. However, the retail chain saw stronger performance during the Christmas period and continued success with its Click & Collect service, now available in 113 stores.

In contrast to UK performance, Primark demonstrated robust growth in other territories, particularly in Spain and Portugal where sales increased by 9%, and in the US which saw a 17% rise. The company’s expansion continues apace in America, where it now operates 29 stores with plans for further growth.

“Primark owner, Associated British Foods (ABF) enjoyed mixed trading this festive season, as revenue only edged slightly higher. Primark continues to be the main story, bringing in around half of the group’s revenue, but even here performance was varied across regions,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

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“Weak consumer sentiment, a strong comparative period, and unfavourable weather were all blamed for keeping Christmas shoppers from flocking to its stores in the UK, which saw the group lose market share and like-for-like sales fall 6.4% on home soil. Primark’s international performance was much better though, more than offsetting this decline. That’s thanks to the group pressing ahead with its store rollout programme, opening seven new stores across the US and Europe over the period. Despite this, Primark’s full-year revenue guidance has been lowered slightly from mid single-digit to low single-digit growth.”

The group’s other divisions showed varying results. The Grocery segment achieved 1% growth, driven by strong international performance from brands such as Twinings and Ovaltine. The Ingredients division posted 4% growth, while the Sugar and Agriculture segments experienced declines of 2.1% and 4.1% respectively at constant currency.

AB Foods shares were down 2.4% at the time of writing.

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