AB Foods Considers Separation of Its Primark, Food Businesses

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  Food and Wine on Tue, Nov 04th, 2025 by Bloomberg L.P.

AB Foods Considers Separation of Its Primark Food Businesses

Bloomberg, 4 November 2025

AB Foods Group plc, the UK’s largest independent food retailer and the parent of the world‑renowned clothing chain Primark, has announced that it is conducting a formal review of its food‑operations arm, Primark Food. The company said the review will explore the possibility of separating, spinning‑off or otherwise restructuring the food business to unlock value, streamline its core operations, and provide capital for growth in its apparel division.

Why a Separation Makes Sense

Primark Food – a collection of grocery, home‑wares and convenience stores branded under the Primark name – currently accounts for roughly 12 % of AB Foods’ annual revenue and about 8 % of its operating profit. While the unit has delivered steady growth, analysts note that the food retail segment has historically been undervalued within the broader AB Foods portfolio. A separation could allow investors to price the food business on its own merits, potentially unlocking a premium that the conglomerate structure has muted.

“We’ve built a strong brand in apparel, but our food business has proven to be a high‑margin, high‑frequency operation,” said AB Foods Chief Financial Officer, Sarah Whitfield, in a statement released to Bloomberg. “Separating it would give us the flexibility to invest more aggressively in both the retail and digital arenas and to use the proceeds to reduce debt or fund acquisitions in the apparel space.”

The move is also timely given the broader trend of conglomerates shedding non‑core assets. Major UK retailers – Tesco, Sainsbury’s, and Morrisons – have either spun off or re‑structured ancillary businesses in the past decade, and investors are increasingly scrutinising multi‑brand portfolios for hidden inefficiencies.

Potential Options on the Table

The review will consider several structural options:

1. Full Spin‑Off – AB Foods could create an independent listed entity for Primark Food, enabling market participants to evaluate the food arm separately. This would allow the parent company to concentrate on its flagship clothing business while giving the new entity its own board, governance, and capital‑raising options.

2. Partial Separation – A de‑merger could focus on the most profitable segments of the food business – for example, the online grocery channel or the high‑end home‑wares line – while retaining the core brick‑and‑mortar chain within AB Foods.

3. Strategic Sale – AB Foods may entertain offers from private equity or other retailers looking to expand their footprint. A sale could deliver a substantial cash infusion that could be used to pay down debt or fund store remodels in Primark’s apparel stores.

4. Joint Venture or Partnership – Partnering with an established food retailer could provide operational synergies while preserving some degree of ownership for AB Foods.

The company has not yet disclosed a preferred outcome but said it will engage with advisors to assess the financial and operational impact of each scenario.

Market Reaction

Investors reacted cautiously to the announcement. On the London Stock Exchange, AB Foods’ shares dipped 1.8 % in early trading, reflecting uncertainty over the timing and scale of the separation. Analysts at JPMorgan raised a “hold” rating, noting that while a spin‑off could unlock value, it would also create a new standalone company subject to its own regulatory and reporting obligations.

Primark’s shareholders, who hold a sizeable stake in AB Foods, have expressed interest in how the separation could affect the value of their holdings. “We’re keen to see the process unfold,” said a spokesperson for the Primark Shareholder Group. “Our priority is to preserve the long‑term value of the brand.”

Regulatory and Timing Considerations

A separation of this magnitude would require approval from the UK’s Competition and Markets Authority (CMA) and compliance with the UK’s Corporate Governance Code. The review is expected to take 12‑18 months, with a potential launch of a spin‑off in early 2027, depending on the outcome of the internal analysis and market conditions.

The company has also indicated that it will be mindful of the fiscal year, aiming to structure the transaction in a way that maximises tax efficiency and minimizes disruption to the operational rhythm of both businesses.

Broader Industry Context

The decision reflects a broader shift in the UK retail landscape, where multi‑brand conglomerates are increasingly separating to sharpen focus. Tesco has already sold its U‑Store chain, and Asda has been considering a sale of its discount supermarket division. The UK government has also signalled a willingness to support spin‑offs that could improve competition and consumer choice.

In the same vein, AB Foods’ apparel arm, Primark, has been expanding aggressively overseas, with recent openings in China, Mexico, and the United States. “Capitalising on the momentum in apparel requires a leaner, more focused group,” said Whitfield.

Next Steps

AB Foods will publish a detailed report of its findings at the end of the review period, which is slated for early 2026. The company has appointed a joint advisory team comprising McKinsey & Co. for strategic consulting and Lazard for financial advisory. The report will outline the financial implications, potential valuation ranges, and a roadmap for any chosen separation strategy.

Investors and analysts alike will be watching closely to see whether AB Foods can leverage this opportunity to reposition itself in a highly competitive market, streamline its operations, and deliver long‑term value to shareholders.