Associated British Foods (ABF) has lowered its annual profit forecasts as its cornerstone retail brand, Primark, battles a widening performance gap between the UK and mainland Europe. In a trading update released on January 8, 2026, the conglomerate revealed, overall group adjusted operating profit is now expected to fall below last year's £1.73 billion. While Primark remains a high-street staple, its reliance on brick-and-mortar stores has left it exposed to shifting footfall patterns and a sharp downturn in consumer sentiment across the Eurozone.

The dichotomy of high-street performance

The festive period underscored a striking regional divide. In the UK, Primark managed to expand its market share with an encouraging 3 per cent sales growth (1.7 per cent like-for-like) during the 16 weeks to January 3, 2026. This resilience was boosted by a strong performance in womenswear and the expansion of digital initiatives such as Click & Collect. Conversely, like-for-like sales in continental Europe - representing 49 per cent of Primark's footprint - plunged by 5.7 per cent. To protect inventory health amidst this slowdown, management was forced into aggressive markdown strategies, significantly diluting operating margins to a projected 10 per cent for the full year. Strategic divergence and the spin-off review

The retail sector's volatility has intensified the debate surrounding ABF’s diversified structure. The group is currently conducting a comprehensive review of a potential Primark spin-off, a move that would separate the fashion giant from ABF’s food and ingredients divisions. Despite the recent profit warning, Joana Edwards, Interim Finance Director, confirmed, the core rationale for the separation remains unchanged, with a final decision expected by April 2026. This strategic crossroads comes as Primark looks to accelerate its US expansion, where sales grew by 12 per cent despite a volatile footfall environment.

Primark is a leading international clothing retailer operating 476 stores across 18 countries. Known for ‘amazing fashion at amazing prices,’ the brand is currently pivoting toward a hybrid digital model while aggressively expanding in the US and Gulf markets. Despite current margin pressures, Primark remains the primary profit engine for its parent company, Associated British Foods, which was founded in 1935.