Primark owner Associated British Foods has warned that profits will fall again next year after reporting a 14 per cent decline in annual earnings.
The FTSE 100 group posted adjusted operating profit of £1.51bn for the year to 12 September 2026, while revenue slipped one per cent on a constant currency basis to £19.58bn.
ABF expects both adjusted operating profit and earnings per share to decline further in 2027, principally due to continued losses in its sugar division.
The company said it remained cautious about consumer spending, inflation and rising energy costs.
Primark has also faced a difficult trading environment, particularly in continental Europe, where weak consumer confidence has weighed on sales.
In its September trading update, ABF forecast Primark’s full-year sales would rise around two per cent, driven by new store openings and franchise expansion, despite a 2.6 per cent decline in like-for-like sales.
Comparable sales in continental Europe were expected to fall 4.7 per cent, while the UK and Ireland delivered modest growth of 0.5 per cent.
Primark has been investing in lower prices, marketing and its womenswear offer in an effort to improve performance.
It is also preparing to introduce home delivery in Great Britain, having acquired an automated fulfilment facility in Sheffield to support the move.
Meanwhile, ABF’s sugar business continues to weigh heavily on the group’s outlook, with losses forecast to reach between £70m and £170m in 2027.
The division has been affected by higher energy costs, low European sugar prices and challenging production conditions.
ABF confirmed that preparations to separate Primark from its food businesses were progressing as planned, with the demerger expected to complete in December 2027.
The split, announced in April, will create two separately listed businesses, allowing Primark to operate independently of ABF’s grocery, ingredients, sugar and agriculture divisions.
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