𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

The owner of Primark has said it is considering spinning off the retail chain from its food business as it also revealed a drop in annual profits.

Associated British Foods (AB Foods) announced a review of the structure of the group alongside its full-year financial results.

It told investors that no decision had been made but its review may result in the board deciding to separate Primark from the food business.

This would see the retailer listed separately on the London Stock Exchange but retaining the majority ownership of Wittington Investments, the investment vehicle for the Weston family.

AB Foods also operates a grocery business, which includes brands Kingsmill, Blue Dragon, Jordans, Twinings and Ryvita, as well as an ingredients arm.

George Weston, the company’s chief executive, said the “size and complexity of Primark” means it may need a separate leadership to oversee the retailer.

“I’ve believed for some while that the food company is not well understood and under-appreciated and if we separated it, it would give us the opportunity to explain it much better,” he told the PA news agency,

“If the split did go ahead, I would hope to be chief executive of the food group.”

The company reported an adjusted pre-tax profit of £1.7 billion for the year to September 13, a decline of 13% compared with the prior year.

Sales across Primark grew by 1% year-on-year to £9.5 billion, with stronger trading over the second half of the year helping to balance out a weaker first half.

It flagged “particularly weak shopping activity within elements of Primark’s customer base” as people were more cautious to spend, with sales in the UK and Ireland slipping by 3.1% compared like-for-like with last year.

But spending improved over the second half which AB Foods attributed to a stronger product offer, especially its womenswear ranges, and an increase in digital engagement – having recently launched a mobile app in some of its markets.

Mr Weston said it had not raised prices in Primark over the past year, other than in the US where prices have been hiked by double-digits “in the face of tariffs”.

He also stressed that the retailer was sharpening its focus on value and “having the best prices on the high street”, highlighting its sportswear ranges and its basics.

However, the company said it was expecting Primark’s consumer environment to remain “subdued” in the year ahead.

Meanwhile, overall retail sales growth was offset by sales within its sugar business dropping by a 10th, the firm said.

Sales were broadly flat year-on-year for both the grocery and the ingredients divisions.

Mr Weston added: “Our unique and exceptional food business has historically been less well understood by the financial markets than Primark, yet it has a highly attractive portfolio, deep global expertise and much potential.

“Primark has an incredibly strong international brand, a powerful customer proposition, and substantial growth opportunities.”