Must read: reaction to AB Foods and Nike updates

Associated British Foods Q3

In its third-quarter trading statement, Associated British Foods (LSE:ABF) said the Middle East conflict has weakened the European profit outlook for its sugar business on rising gas price expectations next year, sending shares lower this morning.

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The sugar division is now expected to report a full-year loss of between £25 million and £60 million after sales fell by 4% in Q3 on lower average selling prices. Elsewhere in its food business, grocery revenue grew by 1% in Q3 and agriculture revenue fell 14%.

All in all, this doesn’t bode too well for the food business which will soon have to stand on its own two feet once the Primark demerger completes. Sugar is the most notable vulnerability in the remaining food business, while grocery appears more resilient with support from key trusted household brands like Twinings.

ABF’s retail business will also face challenges of its own post demerger with intense competition in fast fashion and its weak online presence. Primark’s like-for-like sales fell 2.2% in Q3. In the UK, it struggled in April and May amid unseasonable weather and weak consumer sentiment.

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However, ABF maintained its guidance for Primark despite a difficult clothing market, especially in Europe. The US was a bright spot with sales growth of 16% and three new store openings, but this market only accounts for a small percentage of overall revenues, making it more of a ‘jam tomorrow’ contributor. ABF said it is on track for the demerger to complete before the end of 2027 calendar year.

Nike Q4

Once the only worthwhile destination for sportswear shoppers, Nike Inc Class B (NYSE:NKE) has firmly fallen out of fashion. At first glance, its fiscal fourth-quarter earnings were respectable, with adjusted earnings per share hitting 20 cents on revenues of $10.97 billion, both ahead of expectations. It also received a boost from a one-off tariff return of almost $986 million.

However, this was shrugged off by traders, with shares falling in the post market session after North America revenue grew by a sluggish 3% and Greater China sales slumped 12%. Its guidance was also uninspiring, with forecasts for earnings to be ‘flattish’ in fiscal Q1 and Q2 in 2027, suggesting little near-term improvement.

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Nike has been dealing with an uncertain macro backdrop that’s weighing on discretionary spending and cost inflation from the Iran war, combined with intensifying competition versus fresher, more exciting, agile brands like On, Hoka and Alo as well as local sportswear brands in China.

Nike has been trying to leverage the football World Cup in the USA to support its turnaround plans and build momentum through advertising and social media, but there’s a long way to go for Nike to revitalise its former dominance, and trend-chasing shoppers are notoriously fickle.

Shares in Nike are down by more than a third so far this year.