ABF Shares Rise Despite Primark Sales Growth Slowing

Associated British Foods (LON: ABF) shares are up around 1.5% on Thursday morning after the company released a trading update, revealing revenue figures for the 16 weeks leading up to January 3, 2026.

While the Group's overall revenue is largely in line with prior estimates, a deeper dive reveals pockets of concern, particularly within Primark's European operations.

Group revenue reached £6,759 million, aligning with estimates published on January 8, 2026, and reflecting a 1% increase at actual currency rates, but a 1% decline at constant currency. This mixed performance underscores the challenges ABF faces in navigating fluctuating exchange rates and evolving consumer behavior.

A segment-by-segment breakdown reveals a varied picture. Retail revenue, primarily driven by Primark, saw a 4% increase at actual currency and 1% at constant currency, totaling £3,502 million. Grocery revenue was in line with expectations, growing 0.7% at actual currency and 1% at constant currency, amounting to £1,385 million.

However, the Ingredients, Sugar, and Agriculture segments all experienced declines. Ingredients revenue decreased by 3% at actual currency and 2% at constant currency to £667 million. Sugar revenue fell by 2% at actual currency and 5% at constant currency to £675 million, while Agriculture saw a 4% decrease at both actual and constant currency, settling at £521 million.

Primark's performance warrants closer inspection. While overall sales increased by 1%, like-for-like sales dipped by 2.7%. The UK market showed resilience with a 3% increase in total sales and a 1.7% rise in like-for-like sales. The UK and Ireland, representing 45% of total sales, saw a more modest growth of 2% in total sales and 1.1% in like-for-like sales.

However, Europe (excluding the UK and Ireland), accounting for 49% of Primark's sales, experienced a 1% decrease in total sales and a concerning 5.7% drop in like-for-like sales. The US market, though smaller at 6% of total sales, continues to be a bright spot, boasting a 12% increase in sales.

The contrasting performance between Primark's UK and European operations highlights the challenges the company faces in adapting to diverse market conditions. The strong US growth provides a positive counterpoint, suggesting potential for further expansion in that region.