Associated British Foods PLC (LSE:ABF) shares slumped more than 10% to 1,808.5p in early trading after weaker Primark sales in continental Europe and a deteriorating outlook for its Sugar division overshadowed plans to launch home delivery in Great Britain.
Primark expects fourth-quarter sales to rise around 2%, although like-for-like sales are forecast to decline around 3%. UK sales are expected to increase around 1%, with like-for-like sales broadly flat.
Continental Europe proved notably weaker, with sales forecast to fall 1% and like-for-like sales down around 4.3%, while US sales growth slowed to around 11%.
Jefferies characterised the update as a “muted end to the year” for Primark, pointing to underwhelming European sales and more challenging US trading.
The broker has a 1,650p price target on ABF and expects weaker Sugar performance to put downward pressure on consensus forecasts for 2027. It also highlighted that Primark’s expected operating margin of approximately 10% excludes anticipated demerger-related dis-synergies.
ABF expects Sugar to record an adjusted operating loss towards the upper end of its previous £25 million to £60 million range in 2026, widening to between £70 million and £170 million in 2027.
At group level, adjusted operating profit remains broadly in line with previous expectations, while adjusted earnings per share is forecast to come in ahead.
Primark will meanwhile introduce home delivery in Great Britain, supported by an automated fulfilment facility acquired in Sheffield.
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