Following the confirmation from Associated British Foods (ABF) on the demerger of Primark from its food business before the end of 2027; Sharon Iles, senior apparel analyst at GlobalData, a leading intelligence and productivity platform, comments: “The demerger is a logical structural move, but it comes with risks, especially at a time when consumer sentiment and budgets are under strain from geopolitical conflicts and economic struggles. As a standalone entity, Primark will lose the stability of sitting inside a diversified group where food profits could absorb a weak fashion market. The loss in synergies from the demerger are expected by the group to be below £45m in addition to a one-off separation cost of around £75m.
“Once finalised, Primark will be fully exposed to shifts in consumer discretionary spending, which can easily be impacted by unpredictable factors such as geopolitical conflicts and rising costs of living. Investors seem to recognise this risk as well, as ABF’s share price fell approximately 3.7% in early morning trade.
“However, as a standalone business, Primark can attract retail-focused investors and compete for capital on its own terms, without being measured against grocery or sugar performances. In H1 FY2025/26, group sales fell 2% in constant currency, with the sugar division declining 9%. By contrast, Primark’s constant currency sales increased 2%, highlighting how differently the division performed compared to other divisions.
“As a standalone business, Primark will be able to refocus its long-term strategy and address structural issues. While Primark’s H1 performance was positive, it remains behind competitors in terms of online capabilities, with the brand only fully rolling out its click-and-collect model in the UK in May 2025. The spin off may finally allow Primark to better safeguard its business against growing competition within the value apparel market, with brands such as Inditex’s Lefties planned to enter the UK in Q4 2026, while Shein and Temu continue to gain ground worldwide. Primark already has a proven track record of delivering desirable products at attractive price points, this demerger might allow it to fully capitalise on its winning proposition.”
