Primark Faces Uncertain Future As Competition Intensifies And ABF Considers Spin Off

On a mild November morning, Primark’s flagship Oxford Street store appeared noticeably subdued. As the Christmas trading period approached, only a handful of customers browsed heavily discounted £5 leggings and £9 gilets. Many admitted they typically shopped elsewhere, citing doubts over product longevity despite the low prices.

This current quiet stands in sharp contrast to the feverish scenes of 2007, when Primark’s Oxford Street opening drew a crowd of 3,000 eager shoppers and required police intervention. At that time, the retailer enjoyed double-digit growth as it expanded across the United Kingdom, earning a reputation for delivering fashion trends at exceptional value. A 37 percent rise in sales and a 20 percent increase in profits in 2007 highlight the heights Primark once scaled. The brand even made appearances in British Vogue and won distinctions at high street fashion awards.

The market landscape has changed significantly. Online-first rivals such as Boohoo and Shein now crowd the value end of the market, intensifying competition for bargain-seeking shoppers. While Shein leapt from a negligible UK market share to 3.23 percent in the past six years, Primark’s share remained virtually flat, inching from 5.75 percent to 6.06 percent. Associated British Foods, Primark’s parent company, recently reported that UK and Ireland like-for-like sales at the chain fell by 3.1 percent over the past year, attributing performance to persistent economic weakness and subdued consumer sentiment ahead of the Budget.

Amid these pressures, the future structure of Primark is under serious review. ABF has announced that it may spin off the retailer, which has long stood apart from its core food and ingredients businesses. The recent departure of Paul Marchant, Primark’s chief executive of sixteen years, following an investigation into his conduct, has exacerbated instability at the top. The company is yet to appoint a permanent successor. Industry experts suggest that Primark’s attachment to ABF may be deterring high calibre leadership candidates.

Primark’s reluctance to embrace online retailing has become a critical liability. While competitors thrive with digital focus, Primark does not offer an online shop, instead confining digital operations to click and collect services. This shortfall has become more conspicuous as consumer habits shift towards online convenience.

The potential separation of ABF and Primark aims to unlock shareholder value. Market analysts note that ABF currently suffers from a so-called conglomerate discount, with Primark’s valuation lagging behind peer retailers such as H and M. Some estimates put Primark’s worth at up to £16 billion on a comparable basis, though others caution that, against different retail comparables, the valuation could be significantly lower, closer to £10 billion.

Timing of the split remains under scrutiny. The announcement, delivered against a backdrop of declining sales and tepid market sentiment, raised eyebrows among investors. ABF’s management has stated that a decision could take up to two years, with Primark’s final valuation hinging on future financial results and its ability to restore customer momentum during that window.

The question now is whether Primark can reinvigorate its business and adapt to the evolving retail landscape while retaining its legacy of value-driven fashion. Investors and industry observers await clarity as both ABF and Primark enter a critical period of strategic change.