“A tale of two businesses moving in opposite directions.” That’s how eToro analyst Mark Crouch described Associated British Foods’ latest trading update. And it also explains why the conglomerate is preparing to split itself in two.
For Primark – Penneys in Ireland where the brand was founded – the numbers were steady, or “decent”, as Barclays put it. Quarterly sales rose 3 per cent but growth was driven entirely by new shop openings, with like-for-like sales falling slightly. Europe remained subdued and UK trading broadly flat.
In its earnings call with analysts, management emphasised the need for improved performance in existing shops, to “re-energise Primark’s customer proposition” by focusing on pricing, womenswear, marketing and digital investment. That was echoed by Panmure Liberum, which says a sustained recovery in like-for-like sales remains the key catalyst.
However, the international expansion story obviously still matters. In the US, sales rose 16 per cent, helped by new openings including the Manhattan flagship store.
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The Manhattan store, saysid Primark chief executive and Dubliner Eoin Tonge, is as much about building recognition as selling clothes.
That matters because awareness remains the key constraint in the US market. Morningstar notes Primark has only 43 US outlets, compared with more than 500 for H&M, underlining the scale of both the challenge and the long-term opportunity.
Ironically, it is still sugar that defines the group’s structure. Another profit warning in the division overshadowed Primark’s update, reinforcing the logic of a 2027 demerger. The hope is that separation will finally let each business be judged on its own merits.
