Interactive Investor

ii view: reason for optimism at AB Foods as Primark thrives

Four new US Primark stores recently opened and with cost headwinds expected to ease in 2024. Buy, sell, or hold?

22nd September 2023 11:28

by Keith Bowman from interactive investor

Share on


Full-year trading update to 16 September

  • Expects current full-year retail or Primark revenue up 15% year-over-year to £9 billion
  • Now expects current full year food related adjusted operating profit to be strongly up
  • Share buybacks of £442 million of the £500 million programme completed


  • Now expects Primark’s adjusted operating profit margin to recover strongly in the financial year ahead
  • Continues to expect Sugar to make a substantial improvement in profitability in the next financial year 

ii round-up:

Associated British Foods (LSE:ABF) operates across the five divisions of grocery, sugar, agriculture, ingredients, and retail. 

Its retail business Primark is located in the UK and Ireland, much of Europe and parts of the USA. 

Brands for its food businesses include Silver Spoon, Twinings, Ryvita, Kingsmill, Allison’s, Jordans and Dorset cereals, Patak’s, Rajah’s and Blue Dragon.

For a round-up of this latest trading update announced on 12 September, please click here

ii view:

Started in 1935, AB Foods is today a multinational food processing and retailing business headquartered in London. Primark competitors include Tesco (LSE:TSCO) and Sainsbury (J) (LSE:SBRY) selling their own clothing ranges, and the likes of Next (LSE:NXT)and Marks & Spencer Group (LSE:MKS). Food sector rivals include Tate & Lyle (LSE:TATE) and Premier Foods (LSE:PFD). A constituent of the FTSE 100 index, AB Foods employs over 130,000 staff in more than 50 countries. Trading from around 430 stores in the UK and overseas, 57 UK outlets are now trialling its Click + Collect service. 

For investors, the challenging economic backdrop including high interest rates cannot be forgotten. Food production such as sugar can prove vulnerable to the weather, while the social and environmental impact of clothing manufacture warrants consideration. So does the lost ground Primark needs to recover on rivals such as Next in relation to its online sales offering. 

On the upside, easing cost headwinds over the next financial year are expected to help boost Primark profits. The company enjoys both diversity of business type and geography, with new stores, including four recent openings in the USA, being pursued. A push online also continues, while a price-to-net asset value below the three-year average suggests the shares are not expensive.   

For now, and despite ongoing risks, a relatively defensive offering of food and budget clothing is likely to remain attractive.  


  • Diversified business type and geographical footprint
  • Expanding Primark store numbers


  • Uncertain economic outlook
  • Many factors outside of its control like food commodity prices and currency moves 

The average rating of stock market analysts:

Strong hold

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

Get more news and expert articles direct to your inbox