AB Foods cuts profit forecast as Primark discounting and U.S. weakness bite

Associated British Foods (AB Foods) warned that annual profit will fall after heavy discounting at its Primark fashion chain and weaker U.S. consumer demand weighed on performance, sending the company’s shares down as much as 12% on Thursday.

The profit warning highlights growing pressure on retailers and food producers as European consumers curb spending and economic uncertainty dampens demand in parts of the United States.

AB Foods said like-for-like sales at Primark declined 2.7% in the 16 weeks to January 3, missing market expectations. Strength in the UK was offset by weaker trading in Europe and a “volatile” U.S. retail environment that hurt customer sentiment and store footfall.

In response to subdued demand, Primark stepped up discounting to clear excess stock, squeezing margins. “We expect the tough trading conditions to continue in the short term,” Chief Executive George Weston said, adding that the group has plans in place to improve performance in Europe.

The company’s food businesses were also hit by softer U.S. demand, particularly among Hispanic consumers. Acting Finance Director Joana Edwards told analysts that grocery sales had been affected by weaker consumer sentiment “following everything that’s been happening from April onwards.” AB Foods noted that anti-immigration raids under U.S. President Donald Trump’s administration have influenced shopping behaviour among Hispanic customers, with some shifting towards online purchases.

AB Foods now expects group adjusted operating profit and earnings per share to come in below last year’s levels, reversing its earlier forecast for earnings growth in 2026. While the company maintained its outlook for its sugar and agriculture divisions, it cut forecasts for grocery and ingredients, citing unexpectedly sharp weakness in U.S. demand for cooking oils and bakery ingredients.

The British group, whose portfolio ranges from sugar and food ingredients to clothing retail, is also considering a potential spin-off of Primark, after reporting a decline in full-year profit in November.