Primark Owner Considers Splitting Fashion Business From Food Division As Sales Dip
Primark’s parent company, Associated British Foods (ABF), is considering breaking up the group, separating the fast-fashion chain from its food division, which owns brands like Twinings, Kingsmill, Ovaltine, and Ryvita.
The move follows a difficult year for the company. In the 12 months to September, profits fell across the entire company by 13% to £1.4bn, and like-for-like UK sales at Primark dropped 3.1% as shoppers cut back on non-essential spending. ABF said weak consumer confidence and rising living costs had dampened sales across its retail business.
ABF’s overall revenue slipped from £20bn to £19.4bn, hurt by high costs, lower sugar prices, and the closure of its Vivergo bioethanol plant, which pushed the sugar business into a £205m loss. The company also plans to merge its Kingsmill bakery unit with rival Hovis to cut costs.
For Primark, growth overseas helped offset weak UK results. Global sales rose 1% to £9.5bn, driven by 20% growth in the US and 2% in Europe, where new store openings lifted performance. The retailer now has more than 470 stores across 18 countries, including nearly 190 in the UK.
Chief executive George Weston said the company had launched a strategic review with the help of Rothschild & Co, backed by ABF’s largest shareholder, the Weston family’s Wittington Investments, which controls 59% of the company. The family, worth nearly £18bn, said it plans to keep majority ownership in both businesses if a split goes ahead.
Weston described 2024 as “a year of intense strategic and operational activity,” adding that while he was “confident” about 2026, much depends on an unpredictable consumer climate. He said, “Primark has an incredibly strong international brand, a powerful customer proposition, and substantial growth opportunities,” but added that the group’s food arm remains “less well understood” by the market despite its “highly attractive portfolio.”
However, analysts say the high street chain faces mounting challenges. British shoppers have become more cautious, turning to cheaper online rivals like Shein and Temu. Inflation remains above target at 3.8%, and higher labour costs following the minimum wage and National Insurance hikes in April have also squeezed margins.
Market watchers believe a split could boost Primark’s value. Dan Coatsworth of AJ Bell said many investors would rather buy into Primark’s retail success without it being diluted by food and agriculture interests. He added that “the wheels are being greased for a corporate break-up,” noting that spin-offs are currently “all the rage” among big global companies.
Others agree that ABF’s broad portfolio lacks focus. Laura Lambie from Rathbones described it as “a disparate mixture of businesses with no real strategic rationale behind it,” while Richard Hunter of interactive investor said Primark had reached a size “where it requires laser focus to capitalise on its own growth prospects.”
Despite the challenges, Weston insists ABF remains in a strong position, saying the review aims to ensure both sides of the business “realise their full potential” in the years ahead.
