Primark operating profit falls 12 percent as retailer prepares for demerger

UK retail and food conglomerate Associated British Foods (ABF) has reported its annual financial results for the 52 weeks ended September 12, 2026, revealing a 12 percent decline in adjusted operating profit at constant currency for its retail division Primark to 1.01 billion pounds (1.35 billion dollars).

The fast fashion giant generated revenue of 9.82 billion pounds, representing a 2 percent increase at constant currency and a 4 percent rise at actual exchange rates compared to the previous financial period. Growth was underpinned by store footprint expansion, with new space contributing 5 percent to overall top-line gains. However, group like-for-like (LFL) sales fell 2.6 percent over the year amid broad macroeconomic pressures and subdued consumer sentiment across key markets.

Primark adjusted operating margin compressed to 10.2 percent from 11.9 percent in 2025, reflecting deeper promotional markdowns alongside heavy commercial investments across digital engagement, product positioning and marketing. The company also maintained an active estate strategy, investing 576 million pounds in capital projects throughout the period.

Divergent regional performance across UK, Europe and US

Performance across geographical markets showed marked contrasts. In the UK, which accounts for 39 percent of total retail sales, total revenue grew 2 percent and LFL sales rose 0.5 percent. Strategic initiatives including the expansion of Click and Collect services supported footfall, enabling Primark to lift its share of the total UK clothing, footwear and accessories market to 6.9 percent.

Continental Europe, representing 47 percent of retail turnover, experienced more difficult conditions, posting a 1 percent decline in sales and a 4.7 percent drop in LFL performance. Broadly flat trading across Spain and Portugal was offset by persistent declines in France, Italy and Germany, where local recovery efforts remain at an earlier phase.

In the US, total revenue grew 13 percent, driven by the opening of 14 new locations, including a high-profile flagship in Manhattan, bringing the domestic store portfolio to 47 sites. Despite underlying headwinds from tariffs and cautious consumer sentiment, the retailer reported solid brand traction in the region. Primark also expanded via franchise agreements in the Middle East, operating four stores across Dubai and Kuwait.

Omnichannel progression and product strategy

Strategic emphasis centred on womenswear, the largest commercial category for the brand, which delivered LFL sales growth across all regions following investments in performance wear and capsule collections. The chain initiated a similar overhaul for its kidswear assortment and executed price investments on hundreds of staple lines under its ‘Iconic Value’ campaign.

On the digital front, Primark is preparing to test home delivery services in Great Britain to supplement its store-focused commercial model. To support fulfilment operations, the business completed the acquisition of an automated logistics depot in Sheffield.

Sustainability milestones outlined under the Primark Cares programme included 81 percent of clothing units sold containing recycled or sustainably sourced materials as of July 2026, alongside a 21% annual reduction in Scope 3 greenhouse gas emissions.

Demerger timeline on track for 2027

The retail division continues its formal operational separation from ABF, with the demerger scheduled to conclude in December 2027. Executive leadership was reconstituted ahead of the planned public listing, including the confirmation of former interim head Eoin Tonge as chief executive officer, joined by chief commercial officer Filip Ekvall and chief financial officer Lucy Slinger.

ABF chief executive George Weston stated: “In Primark, we took significant steps to re-energise our customer proposition this year, both enhancing our product offer and strengthening our value credentials, underpinned by increased investment in marketing and digital engagement. Our key priority areas, the UK and womenswear, delivered growth and outperformed our other markets and categories. We are now building on what has worked well and applying the same focus and investment in our European markets and other product categories.”

Weston added: “We are on track to complete the demerger of Primark from AB Foods in December 2027, positioning both businesses to deliver on their medium and long-term growth prospects.”

ABF group revenue closed at 19.58 billion pounds, down 1 percent at constant currency, while group adjusted operating profit contracted 14% to 1.51 billion pounds, weighed down by weaker retail margins and losses in European sugar operations. For the financial year 2027, Primark projects an adjusted operating margin of approximately 10 percent, with store estate expansion expected to contribute four percentage points to total sales growth.