Associated British Foods (LSE:ABF) reported a softer-than-anticipated start to the 2026 financial year, with pressure on both Primark and parts of its US food portfolio expected to result in adjusted operating profit and earnings per share falling below last year’s levels. At Primark, modest like-for-like sales growth and market share gains were achieved in the UK despite a challenging apparel environment, supported by continued investment in product quality, pricing and digital engagement.
However, trading conditions proved more difficult in continental Europe, where like-for-like sales declined sharply and higher markdown activity was required to clear inventory. As a result, overall sales growth at Primark undershot prior expectations, leading management to caution that the retailer’s full-year operating margin could trend towards around 10% if current conditions persist.
In the US, volatile consumer demand weighed on Primark footfall as well as on ABF’s cooking oils and bakery ingredients businesses. The group now expects its Grocery and Ingredients divisions to deliver moderately lower adjusted operating profit in 2026, while its Sugar and Agriculture segments remain broadly in line with previous guidance. Taken together, these trends point to broadly flat group revenue for the year and a more cautious near-term outlook, despite management reiterating confidence in the group’s longer-term strategy and growth initiatives.
From a market perspective, Associated British Foods retains a solid financial base and strong operational discipline, but faces ongoing challenges around revenue momentum and cash generation. Technical indicators present a mixed picture, while valuation appears reasonable and supported by a moderate dividend yield. Commentary from the latest earnings update highlighted progress on strategic priorities alongside continued pressures, particularly within the sugar division and European retail markets, resulting in an overall balanced but cautious outlook.
More about Associated British Foods
Associated British Foods plc is a diversified international group with operations spanning grocery products, sugar, agriculture and speciality ingredients, alongside its value fashion retail business, Primark. The group serves mass-market consumers across the UK, Europe, the United States and other regions, with Primark acting as a key apparel growth engine and its food businesses focused on staple categories such as cooking oils, bakery ingredients and related products.
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