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Associated British Foods PLC on Thursday issued a profit warning amid a challenging start to the financial year at Primark and mixed trading in its food business. ‘We now expect group adjusted operating profit and adjusted earnings per share to be below last year,’ the London-based company said in an unscheduled trading update. In November, AB Foods, which owns retailer Primark and a range of food manufacturing businesses, said it expected to deliver growth in adjusted operating profit and adjusted EPS in the current financial year. In the financial year ending September 13, AB Foods, which owns food brands such as Twinings tea, Kingsmill bakery, Jordans cereals and Mazola cooking oils, as well as Primark, reported adjusted EPS of 174.9p and adjusted operating profit of £1.73 billion. In response, shares in AB Foods were down 11% at 1,917.07 pence each in London on Thursday morning. By division, Retail sales grew 1% at constant currency for the 16 weeks to January 3 year-on-year, as did Grocery sales. Ingredients sales fell 2%, Sugar sales dropped 5% and Agriculture sales declined 4%. The firm said Primark’s UK performance was ‘encouraging’ with sales growth of around 3% in the 16 weeks to January 3, and like-for-like sales growth of 1.7% in a ‘difficult clothing market’. But in continental Europe, like-for-like sales declined 5.7% in the period. ‘Overall, Primark’s sales growth in the period was below our previous expectations and we now expect Primark’s sales growth in the first half of 2026 to be in the low single digits. In a difficult trading environment, we significantly increased markdowns to manage inventory levels effectively, which impacted profitability,’ the company said. AB Foods Chief Executive George Weston said: ‘Primark has had a challenging start to the financial year, with a mixed performance. In the UK, focused actions and investments to strengthen our customer proposition have driven improved trading and market share gains, while trading has remained weak in continental Europe.’ The CEO said the ‘focus is on factors within our control, including initiatives now underway in Europe aimed at improving performance.’ The firm said if Primark’s current sales trends were to continue in the second half, it would expect the adjusted operating profit margin for the full financial year to be around 10%, similar to the first half. In November, AB Foods said it was considering separating its Primark retail business and its Food operations as part of a review into the group’s structure. AB Foods said trading in its Food businesses was ‘mixed’. In the US, the firm said expected ongoing consumer weakness was more ‘acute’ than expected in its cooking oils and bakery ingredients businesses and ‘we are more cautious on the outlook.’ As a result, the company now expects both Grocery and Ingredients segments to deliver adjusted operating profit for the full year that is moderately below last year. In Grocery, the effect of phasing means the impact will be more significant in the first half of the year, it added. In Sugar and Agriculture, there is no change to the guidance provided last November. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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