Associated British Foods Shares Tumble on Weak Primark Sales and Sugar Outlook

Shares in Associated British Foods (LSE:ABF) plunged on Thursday after the conglomerate issued a disappointing fourth-quarter trading update that signaled slowing sales at its Primark fashion chain and a bleak outlook for its sugar business.

In an update released Thursday morning, the company said it expects Primark's like-for-like sales to decline by 3% for the quarter ending September 12. The drop was primarily driven by a significant 4.3% decrease in sales across continental Europe, which overshadowed a marginal 0.4% gain in the UK and Ireland.

Widening Losses and Analyst Concerns

Looking ahead to fiscal year 2027, ABF provided a cautious outlook that further unnerved investors. The company guided for a significantly wider adjusted operating loss for its Sugar division, projecting a loss between £70 million and £170 million. Management attributed the downbeat forecast to higher gas costs and the impact of adverse weather conditions in Africa.

Analyst reaction was negative, with Jefferies noting the update represented "a muted end to the year for Primark led by underwhelming Europe sales." The investment bank described the company's forward guidance as "a downbeat outlook for the stock."

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Broader Market Headwinds

The sell-off in ABF shares was compounded by a weak broader market. The FTSE 100 index fell to a seven-week low on Thursday as geopolitical tensions reportedly pushed Brent crude oil prices above $100 per barrel, dampening investor sentiment across London-listed stocks.

This negative macroeconomic environment added to the selling pressure on ABF, which was already grappling with its company-specific news. While the company confirmed its plans for a Primark home delivery launch, this was not enough to offset the weaker near-term financial projections.