Investors in Primark’s owner will be hoping that efforts to renew its position as a budget retailer with a round of price cuts have helped deliver a lift to summer sales.
Associated British Foods (ABF), which also runs large food, sugar and agriculture operations, will update investors on its fourth-quarter trading performance on Thursday.
Primark, its only retail brand, generates the highest revenues across the group’s business units.
Experts said investors will be hoping to see a late summer boost from the retailer, which revealed it was lowering prices on hundreds of fashion items in July that it said “reaffirms its place as the home of great value fashion”.
This could help bolster sales at a time when the cost of living is edging higher for UK households.
ABF is preparing to separate Primark from its food business and list it on the FTSE 100 as a standalone entity by the end of 2027.
Meanwhile, the company warned in July that it was expecting to report lower profits this financial year, compared to the last, after grappling with higher gas costs linked to the Middle East conflict.
This has impacted its sugar plants and means it is expecting to report an adjusted operating loss for the division.
ABF owns sugar brand Silver Spoon as well as a roster of brands in the grocery sector like Kingsmill, Twinings, Jordans, Patak’s and, following a recent acquisition, Hovis.
Russ Mould and Danni Hewson, analysts for AJ Bell, said: “After a challenging year, investors will be hoping for a sprinkling of good news driven by a boost in late summer clothing sales and the approval of the Hovis acquisition.
“Whether Primark’s recent UK price reductions have translated into positive like-for-like sales growth will be a key area of focus.”
They added that the plans to spin off Primark by the end of 2027 mark a “monumental shift in strategy” for the bosses and will be watched closely to see whether it fetches a strong valuation or trades at a discount.
Aarin Chiekrie, equity analyst for Hargreaves Lansdown, said ABF’s next update is expected to show a “relatively underwhelming” financial performance.
“The key Primark business is forecast to deliver around 2% sales growth in the second half, despite a challenging retail environment, particularly for low-income consumers across the UK and Europe,” he said.
“This comes as continued like-for-like declines in its existing stores are expected to be offset by momentum in the US and growth from new store openings.”