MW Primark sale now on: Associated British Foods considers placing its crown jewel on the market.

By Jules Rimmer

Primark is a retailer known for its value proposition but low-cost online competition has put its business under pressure in recent years.

Discount clothing retailer Primark has grown into a well-known international company operating in seventeen countries and generating revenues of almost GBP10 billion ($13 billion) under the wing of its parent company Associated British Foods. Now, more than half a century since it was founded in Dublin, ABF is contemplating the sale of its prize asset.

Without much fanfare or warning, ABF revealed in its annual results announcement published Tuesday that it was consulting with investment bank Rothschild & Co on a review of its group structure that "may lead to the separation of its Primark and Food businesses."

In London Tuesday, ABF shares (UK:ABF) opened firmly, up 3%, on expectations that the potential move might unlock value. However, they retreated and were trading lower mid-morning suggesting the market was unimpressed with developments but Barclays European consumer analyst team, led by Warren Ackerman, was much more enthusiastic:

"We are fans of pure plays and have advocated for a split but didn't think it was a realistic possibility, so this is a positive surprise." Barclays raised its target price for ABF from GBP21.50 to GBP25.00 with an upside of just over 10%.

As the price action suggests, not everyone shares their enthusiasm. That the process may take a couple of years to materialize might dampen trading sentiment. Jefferies analyst James Grzinic opined "the announcement of a strategic review which may include a Primark/ Grocery separation is unlikely to swing the valuation debate meaningfully as we struggle to see how the two component parts would individually command a higher than 12 times rating in their current shape."

Grzinic rates the stock a hold with a price target of just GBP20.00, some 10% below current levels.

In results just released for the year ending September 2025, Primark achieved operating profit of GBP1.7 billion on revenue of GBP9.5 billion and so a sale of this division could generate a number that is meaningful for FTSE100-listed ABF itself, the market capitalization of which is just GBP16 billion.

Primark - which notably does not sell online, apart from a "click and collect" service - have been under pressure in recent years with the advent of other low-cost ,online competition from the likes of Shein and PDD-held $(PDD)$ Temu.

-Jules Rimmer

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November 04, 2025 05:29 ET (10:29 GMT)

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