AB Foods shares slip as group says "challenging" weather hit Primark sales

Investing.com -- Shares in Associated British Foods (LON:ABF ) slipped in London trading on Thursday after the British group said it expects like-for-like UK sales at its Primark retail division to fall by around 2% in its second half compared to the prior year.

In a trading update, the company said the like-for-like decline was 0.6% in the third quarter and is projected to be "around 3.1%" in the fourth quarter, adding that foot traffic at Primark has been impacted by "challenging weather, particularly in April and June."

Analysts at RBC Capital Markets flagged in a note to clients that the anticipated drop in Primark's like-for-like UK sales in the final six months of the year ended on Sept. 14 was "slightly weaker than we expected." However, they said Primark still offers "a strong space rollout story in Europe and the US, and remains the leading value playing in the UK retail space."

Meanwhile, AB Foods Chief Executive George Weston warned that profitability at the firm's sugar business is "below our previous expectations," citing a "sharp fall" in European sugar prices. He added that the trend is seen impacting the division's profits in AB Foods' 2025 fiscal year before "recovering in FY2026."

The sugar unit projected that it will deliver adjusted operating profit of approximately £200 million pounds for the current financial year and £50 million to £75 million in its following year. The RBC analysts called the forecast "materially lower."

AB Foods is scheduled to release its preliminary 52-week results on Nov. 5.

Source: Investing.com