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Primark is set to separate from its parent company Associated British Foods, marking a major shift in the group’s structure as it navigates economic pressures and global uncertainty.
ABF announced that it will move forward with plans to demerge its fashion division from its food business, which includes well-known brands like Twinings, Kingsmill, and Patak’s. The split, first proposed last year, is expected to be completed by the end of 2027. Primark currently operates 486 stores across 19 countries.
The announcement came alongside weaker financial results. ABF reported a 2% drop in group sales to £9.46 billion for the six months ending 28 February, while pre-tax profits declined 9% to £632 million. The company cited underperformance in its sugar division and weaker grocery sales in the United States as key challenges.
Primark also faced a difficult retail environment, with sales at established stores falling 2.7% globally. While the UK market showed growth as the retailer gained market share, this was offset by a 5.6% decline in mainland Europe, where consumer confidence remains fragile and digital integration lags behind the UK.
ABF warned that ongoing tensions in the Middle East could further impact consumer spending. After a strong start to the spring/summer season in March, trading softened in April as the effects of the conflict began to influence shopper behavior.
Chief Executive George Weston stated that while cost impacts in 2026 are expected to remain manageable, prolonged instability could pose risks to Primark’s performance. He emphasized that the company’s strong financial position provides resilience against external pressures.
Following the demerger, Weston will lead the food-focused business, while Eoin Tonge will continue as chief executive of Primark. The restructuring is expected to cost around £75 million and result in the loss of approximately £45 million in shared cost benefits.
ABF chairman Michael McLintock said the decision was aimed at maximizing long-term shareholder value and allowing both businesses to grow independently. He added that the separation would provide clearer strategic focus for each entity.
Meanwhile, ABF’s food division is pursuing the acquisition of Hovis, although the deal is still awaiting regulatory approval. The company has proposed selling its Northern Ireland bakery operations to address competition concerns.
Shares in ABF fell by 5% following the announcement, reflecting investor caution amid the restructuring and uncertain market conditions.
