Associated British Foods Stock Falls on Warning Over Primark Margins and Sugar Declines

Callum Keown Consumer ABF.LN Associated British Foods ABF AB Sugar EU Primark Margins Primark Food/Beverages Sugar Products Sugar Retail/Wholesale Clothing Stores Specialty Retailing Consumer Goods Food Products Retail European Union Countries Europe North America United Kingdom United States Western Europe Financial Performance Earnings Capacity/Facilities Corporate/Industrial News Facility Openings Political/General News Food/Drink Health Living/Lifestyle Nutrition Content Types Factiva Filters C&E Industry News Filter ABF.LN ASBFY I/FBT I/OFP I/RTS I/SAP M/NCY M/RTWS N/CNW N/DJN N/EEC N/ERN N/FCG N/GEN N/HLT N/LIF N/PFM N/WER R/EC R/EU R/NME R/UK R/US R/WEU WIT.YY Barrons.com Barrons Blogs Wires CODES_REVIEWED Consumer Europe Barron's Take author Callum Keown author|Callum Keown name Callum Keown extractedtext Callum Keown rank 1 codetype author code callum_keown nameformat surname_first author Callum Keown id Callum Keown topicid barrons_display_subject BARCONSUMER barrons_display_subject|BARCONSUMER codetype BARRONS_DISPLAY_SUBJECT canbedisplaysubject true value BARCONSUMER source MANUAL status modified name Consumer code BARCONSUMER co abf co|abf country UK symbol ABF.LN displayname Associated British Foods why about extractedtext Associated British Foods source FACTIVA occurs true seoname associated_british_foods orgtype public relevancerange high chartingsymbol STOCK/UK/XLON/ABF fcode abf fullextractedtext Associated British Foods ticker ABF.LN confidence 100 subcat com relevance 88 significance prominent onlinesignificance prominent name Associated British Foods confidencerange high exchangeisocode XLON codetype co code abf co bsgr co|bsgr fullextractedtext AB Sugar displayname AB Sugar confidence 100 why about extractedtext AB Sugar source FACTIVA occurs true subcat com relevance 25 significance prominent onlinesignificance prominent name AB Sugar confidencerange high relevancerange low fcode bsgr codetype co code bsgr co pstorl co|pstorl fullextractedtext Primark displayname Primark confidence 100 why about extractedtext Primark source FACTIVA occurs true subcat com relevance 81 significance prominent onlinesignificance prominent name Primark confidencerange high relevancerange high fcode pstorl codetype co code pstorl co wittin co|wittin why lineage source FACTIVA subcat com fcode wittin codetype co code wittin co EU co|EU fullextractedtext EU displayname EU name EU extractedtext EU source FACTIVA subcat none codetype co code eu co Primark Margins co|Primark Margins fullextractedtext Primark Margins displayname Primark Margins name Primark Margins extractedtext Primark Margins source FACTIVA subcat com codetype co code primark_margins co ABF co|ABF symbol ABF.LN country UK codetype co displayname Associated British Foods extractedtext ABF source MANUAL code uk_abf name ABF significance prominent onlinesignificance passing-mention exchange U.K.: London exchangeisocode XLON chartingsymbol STOCK/UK/XLON/ABF fcode ABF status modified company ABF.LN company|ABF.LN name Associated British Foods significance PROMINENT name ABF significance PASSING-MENTION djn ABF.LN djn|ABF.LN significance prominent onlinesignificance prominent name ABF.LN why about source FACTIVA occurs true fcode ABF.LN codetype djn code abf_ln djn ASBFY djn|ASBFY significance prominent onlinesignificance prominent name ASBFY why about source FACTIVA occurs true fcode ASBFY codetype djn code asbfy djn WIT.YY djn|WIT.YY name WIT.YY why lineage source FACTIVA fcode WIT.YY codetype djn code wit_yy djn I/FBT djn|I/FBT name I/FBT why lineage source FACTIVA fcode I/FBT codetype djn code i_fbt djn I/OFP djn|I/OFP name I/OFP why lineage source FACTIVA fcode I/OFP codetype djn code i_ofp djn M/RTWS djn|M/RTWS name M/RTWS why lineage source FACTIVA fcode M/RTWS codetype djn code m_rtws djn I/SAP djn|I/SAP name I/SAP why association source FACTIVA fcode I/SAP codetype djn code i_sap djn M/NCY djn|M/NCY name M/NCY why lineage source FACTIVA fcode M/NCY codetype djn code m_ncy djn I/RTS djn|I/RTS name I/RTS why lineage source FACTIVA fcode I/RTS codetype djn code i_rts djn N/ERN djn|N/ERN significance prominent onlinesignificance prominent name N/ERN why about source FACTIVA fcode N/ERN codetype djn code n_ern djn N/PFM djn|N/PFM name N/PFM why lineage source FACTIVA fcode N/PFM codetype djn code n_pfm djn N/CNW djn|N/CNW name N/CNW why lineage source FACTIVA fcode N/CNW codetype djn code n_cnw djn N/GEN djn|N/GEN name N/GEN why lineage source FACTIVA fcode N/GEN codetype djn code n_gen djn N/FCG djn|N/FCG name N/FCG why lineage source FACTIVA fcode N/FCG codetype djn code n_fcg djn N/HLT djn|N/HLT name N/HLT why lineage source FACTIVA fcode N/HLT codetype djn code n_hlt djn N/LIF djn|N/LIF name N/LIF why lineage source FACTIVA fcode N/LIF codetype djn code n_lif djn R/UK djn|R/UK significance prominent onlinesignificance prominent name R/UK why about source FACTIVA fcode R/UK codetype djn code r_uk djn R/US djn|R/US significance prominent onlinesignificance prominent name R/US why about source FACTIVA fcode R/US codetype djn code r_us djn N/EEC djn|N/EEC name N/EEC why lineage source FACTIVA fcode N/EEC codetype djn code n_eec djn R/EC djn|R/EC name R/EC why lineage source FACTIVA fcode R/EC codetype djn code r_ec djn R/EU djn|R/EU name R/EU why lineage source FACTIVA fcode R/EU codetype djn code r_eu djn R/NME djn|R/NME name R/NME why lineage source FACTIVA fcode R/NME codetype djn code r_nme djn R/WEU djn|R/WEU name R/WEU why lineage source FACTIVA fcode R/WEU codetype djn code r_weu djn N/DJN djn|N/DJN codetype djn value N/DJN source DJN-CONTROL status modified inactivebydefault true name N/DJN code n_djn djn N/WER djn|N/WER codetype djn value N/WER source DJN-CONTROL status modified inactivebydefault true name N/WER code n_wer first_publish_headline Associated British Foods Stock Falls on Warning Over Primark Margins and Sugar Declines first_publish_headline|Associated British Foods Stock Falls on Warning Over Primark Margins and Sugar Declines flow NWREGULAR flow|NWREGULAR codetype FLOW value NWREGULAR source MANUAL status modified name Wires code NWREGULAR flow Barrons.com flow|Barrons.com codetype FLOW value Barrons.com source MANUAL status modified name Barrons.com code online name Online title Product code Barrons.com flow Barrons Blogs flow|Barrons Blogs codetype FLOW value Barrons Blogs title Product source MANUAL status modified name Barrons Blogs code Barrons_Blogs headline Associated British Foods Stock Falls on Warning Over Primark Margins and Sugar Declines headline|Associated British Foods Stock Falls on Warning Over Primark Margins and Sugar Declines in i41 in|i41 name Food/Beverages why lineage source FACTIVA fcode i41 codetype in code i41 in i421 in|i421 name Sugar Products why lineage source FACTIVA fcode i421 codetype in code i421 in i4211 in|i4211 name Sugar why association source FACTIVA fcode i4211 codetype in code i4211 in i64 in|i64 name 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BARTAKE subject|BARTAKE ruleid BARTAKE codetype SUBJECT value BARTAKE canbedisplaybrand true name Barron's Take title Barron's Take status modified code BARTAKE wordcount 559 wordcount|559 Getty Images Getty Images Getty Images Getty Images Getty Images Getty Images Getty Images Getty Images Getty Images Getty Images Getty Images Getty Images Getty Images Getty Images Getty Images Associated British Foods Stock Falls on Warning Over Primark Margins and Sugar Declines Associated British Foods Stock Falls on Warning Over Primark Margins and Sugar Declines Associated British Foods Stock Falls on Warning Over Primark Margins

Associated British Foods’ stock fell on Monday as the British conglomerate behind Twinings and Ovaltine said the strong performance of clothing chain Primark would be offset by declines in its sugar business.

Associated British Foods Stock Falls on Warning Over Primark Margins and Sugar Declines

Associated British Foods’ stock fell on Monday as the British conglomerate behind Twinings and Ovaltine said the strong performance of clothing chain Primark would be offset by declines in its sugar business.

https://www.marketwatch.com/story/exclusive-fast-fashion-giant-primark-has-explored-a-major-e-commerce-sales-push-2019-01-17 https://www.marketwatch.com/story/primark-owner-ab-foods-posts-3-rise-in-revenue-2019-07-04 https://www.marketwatch.com/story/associated-british-foods-weakens-after-holding-outlook-for-flat-eps-2019-09-09 Associated British Foods Stock Falls on Warning Over Primark Margins and Sugar Declines By Callum Keown Getty Images Queues outside Primark’s first U.S. store in Boston earlier this year

Associated British Foods’ stock fell on Monday as the British conglomerate behind Twinings and Ovaltine said the strong performance of clothing chain Primark would be offset by declines in its sugar business.

Primark, which has attempted to crack the U.S. market in recent years, could also be hit by reduced margins next year due to a weak pound, ABF warned.

The back story.

Low cost chain Primark has consistently defied the U.K.’s retail gloom in recent quarters, gaining market share and improving sales.

The retailer has also moved into the U.S. market, opening its first store in Boston in 2015.

After gradual expansion in recent years, a tenth U.S. store will be opened in New Jersey later this year followed by another in Florida in 2020.

ABF’s sugar business, AB Sugar - one of the world’s largest producers - has struggled recently due to lower EU prices.

What’s new.

In an update ahead of its full year results, ABF maintained its outlook and reported strong performances from Primark and its grocery division, which includes ACH, Twinings and Kingsmill bread.

Primark sales are expected to rise 4% on the previous year, driven by increased store space in the U.K. and Europe after 14 new store openings.

Like-for-like sales in the U.K. are expected to decline 2% when it reports full-year results in November.

U.S. operations are also set to deliver strong sales growth, the company said, as it plans to open a tenth U.S. store in New Jersey later this year.

However, ABF expected Primark profit margins to fall next year as the weak pound increases the cost of goods.

The company confirmed AB Sugar revenue and operating profit would be down on last year but expected a boost from sugar prices next year as EU stock levels remain low.

Shares fell 2.5% in early trading on Monday.

Moving forward.

Primark has once again driven ABF’s growth, while its sugar division underperforms.

However, the retailer’s strong sales growth was led by new store openings, with comparable sales falling.

Reduced margins are expected next year and Primark, known for its low prices, is unlikely to hike prices as a result of the currency-led increased costs.

It may be time for AB Sugar to start performing to sweeten the bitter pill.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.