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Associated British Foods Shares Plunge Amid Lower Primark Sales Outlook, Higher Sugar Loss Expectations

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Associated British Foods Shares Plunge Amid Lower Primark Sales Outlook, Higher Sugar Loss Expectations

Shares in Associated British Foods (ABF.L) dropped 10% on Thursday morning after the food and retail group said its flagship brand Primark's like-for-like sales are expected to fall in the fiscal fourth quarter and flagged a higher expected loss for the sugar business.

For the fiscal quarter and full-year ending on Sept. 12, Primark's like-for-like sales are expected to log annual declines of 3% and 2.6%, respectively. Total sales, however, are expected to grow by 2% for both periods, the company said in a trading statement.

"Actions to strengthen Primark's customer proposition have continued at pace. Our priority focus areas, the UK and womenswear, continued to outperform our other markets and categories. Trading in continental Europe remained challenging, where actions to strengthen our customer proposition are at an earlier stage," Chief Executive George Weston said.

Within its food businesses, the sugar segment is now expected to post an adjusted operating loss for the full fiscal year toward the higher end of the previously provided guidance range of 25 million pounds sterling to 60 million pounds. The company attributed the higher expected loss to onerous contract provisions, weak European sugar prices, higher gas costs and lower expectations for the UK beet crop yield.

Grocery sales are expected to grow in the mid-single digits in the fiscal fourth quarter, while ingredients sales are expected to rise 10%. Agriculture sales are expected to decline in the mid-single digits.

Despite the challenging conditions, the company said it expects adjusted EPS for fiscal 2026 to be ahead of previous expectations, while adjusted operating profit is expected to be broadly in line with previous forecasts.

AB Foods, which plans to demerge its retail business from food operations by December 2027, also said it will soon launch home delivery for Primark in the UK. The company did not provide a timeline for the launch.

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