Primark Goes Online While ABF Goes Down

Primark Goes Online While ABF Goes Down

Mark Nichols

Thu, September 10, 2026 at 5:50 PM GMT+3 4 min read

THE GIST

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Primark finally decided that delivering clothes to people's homes might be worth trying, but investors had more immediate problems to worry about.

European fashion sales are still shrinking and ABF's sugar division could lose as much as £170 million (about $230 million) next year, leaving the new digital strategy buried beneath a much uglier earnings outlook.

WHAT HAPPENED

Associated British Foods shares fell more than 9% after its latest trading update showed another weak quarter for Primark in continental Europe alongside a sharply deteriorating outlook for the group's sugar operations.

Primark's like-for-like sales are expected to decline 3% in the fourth quarter ending September 12, with the UK and Ireland edging 0.4% higher while continental Europe falls 4.3%. Total Primark sales should still rise around 2% for the full year as new stores and franchise expansion add growth.

The U.S. looks healthier, with fourth-quarter sales rising around 11% as Primark expanded to 47 stores. Franchise operations in the Gulf also performed strongly, with further expansion planned into Saudi Arabia and Mexico.

Primark still expects a full-year adjusted operating margin of roughly 10%, but existing-store sales have struggled as weak European consumer confidence and weather disruption weighed on demand.

Prolonged hot weather hurt the transition into autumn clothing before trading improved as temperatures cooled, while full-year like-for-like sales are expected to fall around 2.6%.

Against that backdrop, Primark confirmed one of the biggest strategic changes in its history by announcing plans to offer home delivery in Great Britain.

The store-focused retailer is acquiring Debenhams Group's automated Sheffield fulfillment facility for £90 million, giving it infrastructure to expand beyond click and collect into direct delivery for the first time. No launch date has yet been given.

Sugar, however, gave ABF shareholders an even bigger reason to sell. The division is now expected to produce an adjusted operating loss toward the upper end of the existing £25 million to £60 million range this year, before potentially deteriorating to between £70 million and £170 million in 2027.

Weak European sugar prices, higher gas costs, weather risks in Africa and currency volatility are all creating pressure, while Grocery profit is also expected to come in slightly below previous guidance after weaker Twinings demand.

WHY IT MATTERS

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Primark launching home delivery would normally qualify as headline news because the company has spent years arguing that sending low-priced clothes individually to customers would undermine the economics that made the business successful.

That argument was never irrational. Primark built its model around enormous store volumes, low marketing costs and customers carrying purchases home, allowing it to avoid much of the picking, packing, delivery and returns expense that weighs on online fashion retailers.

The problem is that consumer behavior has moved faster than Primark's philosophy. Click and collect has expanded across Britain, digital engagement has grown and competitors ranging from Zara to Shein have trained shoppers to expect fashion without visiting a store.

Home delivery therefore gives the soon-to-be independent Primark another growth channel, but it only works if the company can preserve its tight economics while adding fulfillment costs.

ABF is also preparing to demerge Primark from the Food business before the end of 2027, and this update showed why the split is becoming increasingly attractive.

Primark has a European sales problem that management can attack with pricing, products, marketing and digital investment. Sugar has a commodity-price, energy-cost and weather problem where management has much less control, while its potential £170 million loss range for 2027 makes forecasting unusually difficult.

Once the businesses separate, investors will no longer have to own both stories together. Primark can be valued as a global value-fashion retailer, while FoodCo will need to convince shareholders that Sugar's collapse is cyclical rather than a permanently weaker source of returns.

WHAT'S NEXT

Primark's home-delivery launch will be one of the most closely watched experiments ahead of the demerger, with investors wanting evidence that online sales are genuinely incremental rather than simply shifting profitable store purchases into a more expensive fulfillment channel.

Europe is the more urgent operational problem, because another quarter of falling like-for-like sales suggests the turnaround measures introduced earlier this year have not yet fully worked.

For ABF's food business, attention will turn toward the 2027 sugar-loss range and whether energy prices, European supply conditions and African production allow the outcome to land near the better end of it.

The strategic destination is getting clearer as Primark prepares for independence and finally embraces delivery, but the latest numbers showed why investors are not prepared to reward the journey just yet.