ABF raises 2026 profit outlook as Primark launches UK home delivery

Associated British Foods PLC has raised its adjusted earnings per share forecast for the year ending September 12, 2026, citing improved performance from its retail and grocery segments. The FTSE 100 company expects adjusted operating profit to remain in line with previous guidance, but the upgrade in EPS reflects stronger margins in its core businesses. This outlook, reported by GN markets/earnings (en-US), positions the group for a solid finish to the fiscal year despite headwinds in its ingredients division.

The primary driver of the upgrade is Primark’s strategic shift toward digital retailing, specifically the introduction of home delivery across Great Britain. The retailer has acquired a highly automated fulfillment facility in Sheffield to support this expansion, aiming to generate incremental profitable growth while maintaining its traditional store-led model. Management describes the quarterly trading as resilient, with the UK business and womenswear category outperforming expectations, supporting the overall earnings lift.

Regional sales performance varies

Primark’s full-year sales are projected to grow by approximately 2%, although like-for-like sales are expected to decline by 2.6%. The adjusted operating margin for the retailer is forecast to settle around 10%. This aggregate growth masks significant regional divergence. In the United States, sales are expected to surge by 11%, providing a substantial boost to the overall figures. Conversely, the UK market remains stable, with fourth-quarter sales projected to rise by 1% and like-for-like sales remaining broadly flat.

Continental Europe presents a tougher challenge for the retailer, with sales forecast to fall by 1% and like-for-like sales dropping by 4.3%. This decline in the European market is offset by the strong expansion in the US and the steady contribution from the UK. The group’s strategy relies on new store openings and its franchise model to drive volume, even as like-for-like trading shows signs of softness in mature markets.

Sugar division faces continued losses

While Primark and the grocery segment provide stability, the Sugar division remains a significant drag on group profits. The division is expected to record an adjusted operating loss towards the upper end of its previous guidance range of £25 million to £60 million for the 2026 fiscal year. This loss is attributed to persistent structural issues and market pressures within the sugar market, which continue to impact the group’s bottom line despite improvements elsewhere.

Looking ahead to 2027, the outlook for the Sugar division remains challenging. Associated British Foods expects the loss to widen significantly, falling between £70 million and £170 million. This increased loss is driven by anticipated risks including higher gas costs, uncertain African production levels, adverse weather conditions, and unfavorable currency movements. These factors create a volatile environment for the ingredients business, contrasting sharply with the steadier growth seen in the retail arm.

Demerger timeline and grocery growth

Work to separate Primark from Associated British Foods’ food businesses is progressing as planned, with the completion of the demerger expected in December 2027. This structural change will allow Primark to operate independently, potentially enhancing its strategic flexibility. Meanwhile, the group’s other segments show healthy momentum. Grocery sales are expected to grow by mid-single digits in the fourth quarter, while the Ingredients division, excluding sugar, is forecast to see around 10% growth, contributing positively to the overall earnings picture.