Associated British Foods has revealed some challenging news for its Primark clothing brand, as underlying sales experienced a decline of 2.7 percent during the Christmas quarter.
This revelation follows the profit warning issued on January 8, accompanied by estimated sales figures for the 16 weeks ending January 3. Thursday marked the day for final numbers to be disclosed.
The profit warning, which prompted a significant drop in AB Foods’ shares by 14 percent, was attributed to lower-than-expected sales at Primark and a lackluster demand in the United States for its cooking oils and bakery ingredients.
This situation casts uncertainty over the company’s strategy to separate Primark from its food-related businesses, which include well-known grocery names like Ovaltine, Ryvita, and Twinings, in addition to its substantial sugar, agriculture, and ingredients sectors.
Back in November, the group initiated a structural review, committing to a decision by April 21, coinciding with the release of first-half results. Nonetheless, CEO George Weston has indicated that the prevailing assumption leans towards the separation proceeding.
The update revealed some alterations from the figures released on January 8.
Total retail revenue increased by 4.2 percent over the 16-week period, compared to a previous estimate of a 4 percent rise. Sugar revenue saw a drop of 4.3 percent—steeper than the anticipated decline of 2 percent. Ingredients revenue decreased by 2.9 percent, slightly improved from the estimated 3 percent decrease, while agriculture revenue fell by 4.1 percent, consistent with earlier projections.
Grocery revenue remained flat, aligning with the prior estimate.
