Associated British Foods (ABF), the food and retail conglomerate the group that owns Penneys and Primark, is exploring a spin-off of its fashion chain and food business as part of a strategic review.
The UK-listed group on Tuesday said it was reviewing ownership of both businesses in consultation with its majority shareholder, Wittington Investments, the holding company for the Weston family that has food and retail businesses in North America and Europe.
ABF said it was committed to “maintaining majority ownership of both businesses”. Shares in the group, which has a market capitalisation of £16.3 billion (€18.5 billion), were down 2.6 per cent in early trading in London.
George Weston, chief executive and third generation of the family shareholders, told the Financial Times that “the financial markets will better understand the food business if Primark were separated into a standalone listed business”.
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“There’s a realistic chance of this happening,” he said.
ABF has faced persistent scrutiny over the past decade about whether Primark — which sells T-shirts for £2.50 (€2.84) and jeans for £14 — fits into a portfolio that includes bioethanol, sugar beets, bread, Twinings tea and Tilda rice.
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The company has historically argued that being a family-owned conglomerate helped insulate it from downturns and allowed it to plan for the long term.
While Primark has been ABF’s standout business for a number of years, it has struggled in recent years as cash-strapped shoppers rein in spending. The rapid emergence of Shein and Temu, which ship cheap clothes directly from Chinese factories to consumers’ homes, has added to the chain’s challenges.
Independent analyst Nick Bubb said “it would be ironic if after all these years ABF decides to separate off Primark just as its performance starts to be badly impacted” by competition from Shein and Temu.
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Mr Weston said any potential split of Primark from the business was “not in response to any trading issues”, adding that the question of Primark’s role within ABF had been regularly reviewed and last considered before the pandemic hit five years ago.
The current strategic review had been going on for a “number of weeks”, Weston said, but stressed that a split was “not a done deal” and could take up to two years to complete.
ABF’s food business spans groceries, ingredients and agricultural products, and Weston signalled he intended to continue as its head.
Examining a split was about effective governance, rather than a need to change strategy, said Weston, adding that “it’s not about the short-term, it’s about the next 20 years”.
Several analysts described ABF’s move as “surprise”.
“The food businesses are not very well understood as the focus has always been on Primark, and Primark trades on a significant implied discount to other listed fashion retail peers,” said Anubhav Malhotra, an analyst at Panmure Liberum. “The separation of the businesses could help unlock some of this value.”
ABF reported on Tuesday that Primark’s full-year revenues rose by 1 per cent to £9.5 billion and operating profits increased by 2 per cent to £1.12 billion. The chain has been steadily expanding in the US over a number of years and now has 33 stores in the country.
At a group level, ABF reported a 1 per cent decline in revenues to £19.5 billion. Operating profit fell 23 per cent to £1.5 billion.
Earlier this year, speculation about a Primark spin-off intensified after the abrupt departure of the fashion retailer’s long-serving chief executive Paul Marchant in the wake of a misconduct scandal in March.
Primark is being run on an interim basis by former Marks and Spencer executive Eoin Tonge, who joined ABF as chief financial officer in 2022. Weston said the appointment of Marchant’s replacement would be influenced by whether ABF decided to split Primark from the group. - Copyright The Financial Times Limited 2025
