Penneys owner AB Foods slumps amid weak earnings
Penneys owner Associated British Foods reported a 10 per cent fall in first-half profit on Tuesday, hurt by a loss in its sugar division, sending its shares down 8 per cent in early trading.
The group however kept its guidance for 'low single digit' annual growth at its Primark clothing unit, driven by new stores in continental Europe and the United States, offsetting weaker sales in the UK and Ireland.
Sales at Primark, whose boss Paul Marchant resigned last month over inappropriate behaviour, rose 1 per cent to £4.5 billion (€5.3 billion).
'While we continue to assume our trading in the UK remains challenging in H2 2025, there have been some early signs of improvement in recent weeks,' the company said.
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'There is not much to celebrate in these results from AB Foods,' said Charlie Huggins, a portfolio manager at Wealth Club. 'Primark's sales performance in the UK and Ireland also continues to disappoint. Like-for-like sales fell by 6 per cent, worse than competitors, meaning Primark lost market share in the period.'
AB Foods said it expected its sugar business to make a full-year adjusted operating loss of up to £40 million, reflecting persistent low European sugar prices, a loss at its UK bioethanol business, Vivergo, and challenges in Tanzania and South Africa.
It said it was close to completing a review of its Spanish sugar business Azucarera, and it was considering mothballing or closing the Vivergo plant unless there were changes to UK bioethanol regulations.
The group maintained guidance for its grocery, ingredients and agriculture businesses.
It said adjusted operating profit, its preferred profit measure, was £835 million in the six months to March 1, on flat revenue of £9.5 billion on a constant currency basis.
Shares in AB Foods fell 8 per cent, wiping out most of the 10 per cent gain recorded so far this year. --Reuters
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