Primark owner ponders spin-off and separate listing in possible boost to City

Primark could be spun off and launched on the London stock market in a boost to the City after its owner announced a possible restructure.

Associated British Foods (AB Foods) said it was reviewing the structure of the group which could result in Primark being separated from the food business.

The UK-listed company operates a grocery business, which includes brands Kingsmill, Blue Dragon, Jordans, Twinings and Ryvita, as well as sugar, ingredients and agriculture divisions.

Its chief executive, George Weston, said the outcome of the review could mean spinning off Primark as a separately-listed entity in the UK.

“We would have Primark listed on the London Stock Exchange. Food would be listed on the stock exchange,” he told the PA news agency.

A separate listing could deliver a boost for London’s stock markets which, in recent years, has faced a shortage of big flotations and a string of large firms moving their primary listings to the US.

Mr Weston described it as a “demerger” adding: “Wittington would remain the majority shareholder of both companies; it has 58% of ABF now, it would have 58% of each of the two vehicles.”

Wittington Investments is the investment vehicle for the Weston family and the largest shareholder of AB Foods.

The Weston family were ranked in the top 10 of this year’s Sunday Times Rich List’s with a combined wealth of about £17.8 billion.

Mr Weston said the “size and complexity of Primark” means it could benefit from having a separate leadership structure to the food business.

“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 PA.

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

Dan Coatsworth, head of markets at AJ Bell, said: “The board now seems to have finally woken up to the fact that it might benefit from splitting into two, as the component parts appeal to different types of investors.

“Primark might even command a much higher valuation as a standalone listed entity.

“AB Foods says it is considering all options but essentially that means the wheels are being greased for a corporate break-up.

“It’s all the rage at present, with the likes of Unilever, Kraft Heinz and Warner Bros Discovery among those in the process of undertaking a demerger.”

Richard Hunter, head of markets at Interactive Investor, said the retail sector is “famously competitive, and Primark now lines up against the likes of Chinese players such as Shein and Temu, while its online offering is still far behind that of Next”.

“Nonetheless, AB Foods is estimating that the continued rollout of stores will further boost sales growth, and the group opened 23 new stores in the second half of the year at home and abroad,” he said.

AB Foods 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, in its financial results published on Tuesday.

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.

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.