Was ABF Right to Demerge Primark?

Why It Matters

The demerger isolates Primark’s retail risk and allows FoodCo to focus on food margins, potentially delivering clearer investment theses and improving capital allocation for both businesses in a volatile consumer environment.

Key Takeaways

• ABF to split into FoodCo and standalone Primark by 2027
• Primark revenue ~£9.5bn ($12bn) with 2% sales growth
• Adjusted operating profit fell 13% to £471m ($600m)
• European like‑for‑like sales down 5.6%, US up 12%
• Analysts expect focused board to boost Primark margin discipline

Pulse Analysis

ABF’s decision to split its £18.3 bn ($23 bn) conglomerate into a pure‑play food group and a standalone fast‑fashion chain reflects a growing trend among diversified conglomerates to simplify their structures. The proposed “FoodCo” will inherit roughly £9.8 bn ($12.4 bn) in sales, while Primark will continue as a global value‑fashion retailer with about £9.5 bn ($12 bn) in revenue. By listing both entities on the London Stock Exchange and targeting FTSE 100 inclusion, ABF hopes to present investors with clearer, sector‑specific growth stories at a time when inflation‑driven consumer restraint is reshaping retail spending.

Primark’s performance data underscores the split’s timing. Although total sales rose 2% to £4.66 bn ($5.9 bn) in the first half of 2026, same‑store sales slipped 2.7% and margins narrowed to 10.1% from 12.1%, driven by weak European demand and rising input costs. Freed from a board preoccupied with sugar and commodity pricing, the retailer can now prioritize a retail‑focused governance model, invest in AI‑driven inventory and customer‑insight tools, and double down on its strong women’s and kidswear categories to protect its sub‑10% EBIT margin.

For FoodCo, the de‑merger removes the volatility of fashion retail from its balance sheet, allowing it to concentrate on food‑price inflation, supply‑chain efficiencies, and margin expansion in a sector that remains relatively defensive. Investors seeking stable cash flow may find the pure‑play food business attractive, especially as the UK and European markets anticipate modest growth in grocery spend. The dual listing also creates a natural hedge for ABF shareholders: one vehicle captures the upside of a resilient food market, while the other bets on Primark’s ability to reclaim market share against online discounters such as Shein and Temu.