Associated British Foods shares tumble 11% after Primark warns of low-single-digit H1 growth
Associated British Foods shares tumbled 11% after Primark began the year with weaker-than-expected sales over the 16 weeks to 3 January. It forecast low-single-digit H1 2026 growth and prompted Panmure Liberum to cut its rating to hold from buy.
1. Panmure Liberum Cuts Rating on AB Foods
On Friday, Panmure Liberum downgraded its recommendation on Associated British Foods from 'buy' to 'hold' following the group's surprise profit warning the previous day. The broker highlighted that Primark’s deteriorating performance in continental Europe has become the primary headwind for the broader investment case. Panmure’s analysts pointed to weakening consumer spending in key European markets and have trimmed their earnings estimates for AB Foods by 8% over the next 12 months.
2. Shares Plunge After Trading Update
Shares of AB Foods fell sharply by 11% on Thursday after the company issued a trading update covering the 16 weeks to 3 January. Primark’s sales growth in that period came in below management expectations, particularly in France, Germany and Spain, where footfall declined by mid-single digits. While UK sales remained broadly stable, the shortfall prompted AB Foods to warn of weaker-than-forecast revenue and margin pressure in the new financial year.
3. Growth Guidance Revised Lower
In its update, AB Foods disclosed that Primark’s sales growth for the first half of the 2026 financial year is now expected to be in the low single digits, down from previous guidance of mid-single-digit expansion. The company cited softer consumer confidence in continental Europe as the key driver of the revision and indicated that cost inflation in supply chains could further compress profit margins if the trading environment does not improve by the summer.