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owner of Primark has said it is considering separating the retail chain from its food business as it also revealed falling annual profits.
Associated British Foods (AB Foods) announced a review of the group structure along with its full year financial results.
It told investors that no decision had been made but that its review could result in the board deciding to spin off Primark from the food business.
This will list the retailer separately London Stock Exchange but retained majority ownership of Whittington Investments, the Weston family’s investment vehicle.
AB Foods also operates a grocery business, which includes the Kingsmill, Blue Dragon, Jordan, brands. Twinings and Ryvita, as well as a content branch.
The company’s chief executive, George Weston, said “the size and complexity of Primark” means it may need a different leader to oversee the retailer.
“I have believed for some time that the food company is not well understood and underappreciated and if we took it apart, it would give us an opportunity to explain it better,” he told the PA news agency.
“If the split goes ahead, I would hope to become chief executive of the food group.”
The company reported an adjusted pre-tax profit of £1.7 billion for the year to September 13, down 13% on the previous year.
sales Primark as a whole grew 1% year-on-year to £9.5bn, with strong trading in the second half of the year helping to offset a weak first half.
This marked “particularly weak shopping activity within elements of Primark’s customer base” as people were more cautious in spending with sales in the UK and ireland There has been a decline of 3.1% compared to last year.
But spend improved in the second half, which AB Foods attributed to a stronger product offering, particularly its women’s apparel range, and increased digital engagement – which recently launched a mobile app in some of its markets.
Mr Weston said there had been no price increases at Primark over the past year, except in the US where prices had increased by double digits “in the face of tariffs”.
He also stressed that the retailer is maintaining its focus on value and having “the best prices on the high street”, highlighting its sportswear range and its fundamentals.
However, the company said it expects Primark’s consumer environment to remain “dummy” in the coming year.
Meanwhile, the company said overall retail sales growth was hit by a 10% decline in sales at its China business.
Year-over-year sales were broadly flat for both the grocery and grocery divisions.
Mr Weston said: “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 enormous potential.
“Primark has an incredibly strong international brand, a powerful customer proposition and substantial growth opportunities.”