Associated British Foods Shares Plunge as Primark Weakness Weighs on Outlook

06:13 AM EST, 01/08/2026 (MT Newswires) -- Associated British Foods (ABF.L) shares dropped 12% by Thursday midday trading, after the food processing and retailing company issued a profit warning for the 16-week period and fiscal 2026 amid weak consumer conditions. For the 16 weeks ended Jan. 3, ABF expects group revenue to decline 1% year over year at constant currency, while rising 1% on an actual currency basis. As such, the group anticipates adjusted operating profit and adjusted EPS for the full fiscal year to be below the previous year's levels. The downgrade was attributed to mixed performance at the Primark retail business, where sales growth for the 16 weeks missed expectations and is projected to be in the low single digits for the fiscal first half. In the UK, total and like-for-like sales rose 3% and 1.7%, respectively, supported by product investment, stronger digital engagement, and womenswear sales. In contrast, weak consumer confidence weighed on continental Europe, where total sales slipped 1% and like-for-like sales fell 5.7%. "Primark has had a challenging start to the financial year, with a mixed performance," Chief Executive George Weston said, adding that UK initiatives have driven market share gains, while actions are underway to improve trading in Europe. ABF's food segments also faced pressures, particularly in the US, with grocery and ingredients segments now anticipated to deliver fiscal 2026 adjusted operating profit that is "moderately below" the previous fiscal year. Meanwhile, there are no outlook changes for the group's sugar and agriculture business. Weston noted that management maintained a confident outlook on the group's overall prospects, despite acknowledging that the "tough" trading environment is likely to persist in the near term. ABF is scheduled to release its business segment's final revenue for the 16 weeks on Jan. 22. RBC Capital Markets noted a negative sentiment toward the unscheduled trading update amid the company's "relatively muted" short-term growth prospects. "ABF's largest business, Primark, offers a solid space rollout story in Europe and the US, and remains the leading value player in the UK retail space, albeit its price perception appears to have risen in several markets. On the Food side of the business, Grocery has now passed through a period of super-normal pricing in the US, while Ingredients has shown consistently strong growth up until now. Sugar profitability has been very weak due to Vivergo weakness and low EU sugar prices. It should recover somewhat in FY26, although visibility remains low," the research firm said.