Associated British Foods Explores Landmark Primark Spin-Off Amidst Shifting Retail Landscape

Associated British Foods (ABF), the diversified conglomerate behind fast-fashion giant Primark, is reportedly exploring a potential spin-off of the retailer from its extensive food business. This strategic review, confirmed by abf on November 4, 2025, aims to maximize long-term shareholder value by potentially separating the distinct entities.

The consideration comes as ABF undertakes a "comprehensive review" of its business structure, with advisory firm Rothschild & Co assisting in the process. ABF's largest shareholder, Wittington Investments, which is controlled by the Weston family, has expressed commitment to maintaining majority ownership in both businesses should a separation occur.

This move follows a challenging financial year for ABF, which reported a 13% decline in full-year profit and a 23% drop in operating profit to £1.5 billion for the year ending September 13, 2025. This overall decline occurred despite Primark's operating profit growing by 2% during the same period, as noted by Morningstar UK on November 5, 2025.

Primark itself experienced a 3.1% decline in like-for-like sales in the year leading up to September, with City AM reporting a 3.5% drop in 2025. This dip is largely attributed to weak consumer confidence and a "subdued" retail market, a trend expected to persist into 2026, according to the original article.

ABF CEO George Weston stated that the food business is "less well understood" by financial markets than Primark, despite its attractive portfolio and potential. The review seeks to address this perceived undervaluation and provide a clearer focus for investors, as reported by The Irish Times on November 4, 2025.

While no final decision has been made, the outcome of this review could lead to the board deciding to undertake a formal separation. ABF hopes to conclude this process by April 2026, coinciding with the reporting of its half-year results, according to the Irish Examiner.

The potential spin-off reflects a broader trend among conglomerates seeking to streamline operations and unlock hidden value in diverse portfolios. Analysts suggest that a separated Primark could command a significantly higher valuation, benefiting from its strong brand and international expansion.

• Associated British Foods (ABF) has historically operated as a diversified conglomerate, encompassing a wide array of businesses from food and sugar production to ingredients and its prominent retail arm, Primark. This structure, which includes brands like Twinings, Kingsmill, and Mazola, has traditionally been defended by management for offering diversification and downside protection, particularly during economic downturns.
• Key stakeholders in this potential separation include ABF's management, led by CEO George Weston, and the Weston family's Wittington Investments, which holds a 59% majority stake in ABF. Weston previously defended the conglomerate model but now acknowledges that financial markets might better understand the food business if Primark were a standalone entity, as he told the Financial Times.
• The economic implications of a spin-off are significant, with analysts at Panmure Liberum suggesting a separated Primark could have an implied market capitalization of £13.4 billion, compared to the group's current valuation. Morningstar UK noted on November 5, 2025, that such a move could unlock a higher multiple for the faster-growing retail business, which is often overshadowed by the more complex food operations.
• Primark faces increasing challenges from a competitive retail landscape, including pressure from low consumer spending, inflation, and energy costs. The rapid emergence of online fast-fashion rivals like Shein and Temu has also added to the pressure on Primark, as highlighted by The Irish Times on November 4, 2025.
• The broader retail market outlook for 2025-2026 indicates continued caution among consumers. While consumer confidence has shown some improvement, it remains in negative territory, with shoppers wary of over-committing due to lingering inflation, everyday expenses, and borrowing costs, according to the Centre for Retail Research.
• The strategic rationale behind the potential separation is to provide a sharper focus for both the retail and food businesses. ABF believes that a clearer distinction would allow investors to better appreciate the value of its food division, which CEO George Weston described as having a "highly attractive portfolio, deep global expertise and much potential."
• The review process is being conducted with the assistance of Rothschild & Co, and while no decision is final, CEO George Weston told Reuters that the review would not be announced "if we didn't think that there was a fair likelihood of it happening." The process could take up to two years to complete, with a conclusion anticipated by April 2026.
• ABF's food businesses, including its sugar, grocery, ingredients, and agriculture units, have experienced mixed results. The sugar division, for instance, fell into the red due to persistently low European sugar prices and high beet costs, contributing to the overall decline in ABF's operating profits, as reported by The Grocer on November 3, 2025.