Primark Announces Home Delivery Launch in Britain as AB Foods Plans Demerger
Primark's Strategic Shift and AB Foods Demerger Plans
By James Davey
Primark Embraces Home Delivery
LONDON, Sept 10 (Reuters) - Primark, the budget fashion chain being spun off from Associated British Foods, will launch home delivery in Britain, the group said on Thursday, ending its long-standing resistance to direct-to-consumer online sales.
The FTSE 100 group, which confirmed in April that it would demerge Primark from its food businesses next year, already offers a Click & Collect service in Britain but has long shunned home delivery, saying it did not make economic sense with its low price merchandise.
Market Reaction and Financial Impact
AB Foods' shares tumbled more than 11% on Thursday, extending 2026 losses to nearly 16%, as the home delivery move was overshadowed by Primark's subdued trading and a forecast for higher losses for the group in sugar.
CEO Insights on Home Delivery Economics
CEO George Weston told analysts the economics of home delivery had improved, including the introduction of higher fees and returns policies.
Weston said the group was not setting a timetable for home delivery or providing any financial data at this stage.
Digital Maturity and Fulfilment Expansion
"Primark's digital maturity, including the success of Click & Collect, and online market developments, mean there is now the opportunity for profitable growth through the home delivery channel," the company said.
To enable the move, Primark has acquired a highly automated fulfilment facility in Sheffield, northern England, from Debenhams for £90 million ($122 million).
"While physical stores remain relevant, online shopping is well established and Primark clearly had no choice but to adapt to the modern retail world," said Dan Coatsworth, head of markets at AJ Bell.
AB Foods Demerger and Business Outlook
Work on Demerger Progressing Well
WORK ON DEMERGER PROGRESSING WELL
AB Foods said work on the demerger was progressing well and was expected to complete in December 2027.
Its food businesses include grocery brands such as Ovaltine, Ryvita and Twinings, as well as major sugar, agriculture and ingredients units.
Sales Performance and Forecasts
Primark's like-for-like sales are expected to fall 3.0% in its fourth quarter to September 12, with the UK and Ireland up 0.4% but continental Europe down 4.3%.
"Trading in continental Europe remained challenging, where actions to strengthen our customer proposition are at an earlier stage," Weston said.
Grocery sales are expected to grow in the "mid-single digits" in the fourth quarter, with ingredients sales up about 10%.
Sugar Segment Challenges
In sugar, sales and profitability declined in the UK and Spain due to lower average selling prices in Europe.
Sugar losses for the full 2025-26 financial year are expected to be at the higher end of a previous guidance range of £25 million to £60 million and worsen to £70 million to £170 million in 2026-27.
Profit Outlook
The group forecast adjusted operating profit for 2025-26 broadly in line with its previous expectations.
Its initial view for 2026-27 is for progress in most of its businesses, except sugar and the impact of integrating the recently acquired Hovis bread brand on grocery.
($1 = 0.7378 pounds)
(Reporting by James Davey. Editing by Sarah Young, Mark Potter and Keith Weir)
