Associated British Foods PLC (GB:ABF) reduced its sales guidance for its fashion brand Primark due to sluggish sales in the UK and Ireland during the autumn. The company is now targeting low-single-digit sales growth for Primark in 2025, down from its previous forecast of mid-single-digit growth. Following the update, ABF shares fell by 3% as of writing.
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Associated British Foods (ABF) is a diversified company operating in the grocery, agriculture, ingredients, sugar, and retail segments. The company generates the majority of its earnings from Primark.
ABF Reveals Sales Performance
In the first quarter of FY25, ABF reported that sales in the UK and Ireland declined by 4%, while like-for-like sales fell by 6.0%. This region contributes around 45% of the company’s total sales. Overall, Primark’s sales increased by 1.9%, driven by growth in markets like Spain, Portugal, France, Italy, Central and Eastern Europe, and the U.S. Additionally, Primark’s sales saw an uptick during the crucial Christmas period, after they declined in October and November.
Among other segments, Ingredients sales rose by 4% followed by Grocery, which gained 1%. On the other hand, Sugar sales declined by 2% due to lower European sales prices, and Agriculture sales dropped by 4%
Moving ahead, ABF expects Primark’s sales in FY25 to be driven by new store openings. Specifically, the company’s store expansion plan in growth markets across Europe and the U.S. is projected to contribute 4% to the brand’s overall sales growth.
Are ABF Shares a Good Buy?
As per the consensus among analysts on TipRanks, ABF stock has been assigned a Hold rating backed by six recommendations. The ABF share price target is 2,296.47p, which indicates a change of 22.6% from the current level.
