The company behind Primark has revealed it's weighing up whether to separate the fashion retailer from its food operations after posting a fall in yearly profits. Associated British Foods (AB Foods) unveiled a strategic review of its corporate structure alongside its annual financial figures.
The business recorded an adjusted pre-tax profit of £1.7 billion for the 12 months ending September 13, down 13% on the previous year. Primark's turnover edged up 1% year-on-year to £9.5 billion, with improved performance in the latter six months offsetting a sluggish start to the period.
The group highlighted "particularly weak shopping activity within elements of Primark's customer base" as consumers tightened their purse strings, with UK and Ireland like-for-like sales falling 3.1% compared with last year. However, trading picked up in the second half, which AB Foods credited to an enhanced product range, particularly in womenswear, and greater digital interaction following the recent launch of a mobile application in certain markets.
Nevertheless, retail sales growth was counterbalanced by a 10% decline in its sugar division, the firm noted. AB Foods also runs a grocery operation encompassing brands such as Kingsmill, Blue Dragon, Jordans, Twinings and Ryvita, alongside an ingredients division.
Sales remained largely unchanged year-on-year across both divisions. The firm informed investors that whilst no final decision has been reached, its strategic review could lead the board to split Primark from its food operations, reports Plymouth Live.
Chief executive George Weston commented to say: "Our unique and exceptional food business has historically been less well understood by the financial markets than Primark, yet it has a highly attractive portfolio, deep global expertise and much potential. Primark has an incredibly strong international brand, a powerful customer proposition, and substantial growth opportunities."
Nevertheless, the company anticipates Primark's trading conditions will remain "subdued" over the coming year. The retailer plans to concentrate on competitive pricing to boost sales whilst pressing ahead with its store expansion programme.