Associated British Foods Slashes Profit Outlook for FY26 As Primark Stumbles; 16-Week Revenue Flat in Real Terms

Associated British Foods plc reported a mixed 16-week performance ending January 3, with reported group revenue growth of just 1% year-over-year, though this masked underlying weakness—the company’s british foods and apparel empire actually contracted 1% when adjusted for currency fluctuations.

More troubling was the company’s revised guidance. ABF has downgraded its full-year outlook, now expecting both adjusted operating profit and adjusted earnings per share to fall below prior-year levels, a stark reversal from its previous forecast of growth. Management attributed the disappointing revision primarily to deteriorating conditions within its Grocery and Ingredients divisions.

Primark’s Retail Momentum Stalls

Primark, the group’s flagship retail banner, emerged as a key drag on performance. The fashion retailer posted a challenging start to the financial year with decidedly mixed results. UK Primark sales expanded 3% in the period, but like-for-like growth slowed to just 1.7%, highlighting the headwinds in consumer discretionary spending, particularly during the holiday season. Overall, Primark’s expansion fell short of management expectations during the 16-week window.

Looking ahead, ABF has trimmed its Primark outlook. The company now projects low single-digit sales growth for the first half of 2026. More significantly, management has guided for a 10% adjusted operating profit margin for the full year—roughly in line with first-half results assuming current sales trends persist. This represents a meaningful reduction from prior guidance, which had pointed to margins slightly below the previous year’s level.

Divisional Performance Mixed Across Portfolio

Beyond retail, Associated British Foods faced headwinds across most business segments. The Retail division posted the strongest results, with revenues advancing 4% on a reported basis. However, this was offset by softness elsewhere: Grocery revenues were essentially flat, while Ingredients contracted 3%, Sugar declined 2%, and Agriculture fell 4% year-over-year.

Management has now guided for Grocery and Ingredients adjusted operating profit to come in moderately below last year’s levels for the full year—a material miss versus prior expectations of roughly flat comparisons. Agriculture operating profit is expected to remain in line with 2025, while the company continues to expect profit improvements in Sugar and a small adjusted operating profit contribution from 2026 operations.

Management Commentary and Outlook

Despite the downgrades, Associated British Foods management maintained a cautiously optimistic tone about longer-term prospects. The company acknowledged that “tough trading conditions are expected to persist in the near term,” but reiterated confidence in the Group’s medium and long-term growth trajectory.

ABF will provide detailed segment-level revenues for the 16-week period on January 22.