What: Primark faces leadership instability and slowing sales as ABF explores a demerger, with analysts divided on whether the move will unlock value or expose new risks.

Why it is important: The demerger reflects the challenges and opportunities facing legacy retailers as they adapt to shifting consumer behavior, digital disruption, and increased competition from online and second-hand platforms.

Associated British Foods’ proposal to split Primark from its food business marks the group’s most significant structural change in decades, coming at a time of leadership uncertainty and sluggish sales in Primark’s core UK and Ireland markets. The move has surprised analysts and investors, who are divided on whether a standalone Primark can close its valuation gap with rivals like Inditex and H&M, given current performance and intensifying competition from fast fashion disruptors such as Shein, Temu, and second-hand platforms like Vinted. Primark’s revenues have stagnated, and like-for-like sales in key markets have declined, even as the company continues to expand in the US and Gulf regions. The demerger is seen as an attempt to unlock value and sharpen strategic focus, but it also exposes both Primark and ABF’s food division to greater scrutiny and operational risk. The outcome will hinge on Primark’s ability to stabilize leadership, innovate, and adapt to evolving consumer preferences and sustainability pressures in a rapidly changing retail landscape. 

IADS Notes: ABF’s proposed demerger of Primark from its food business represents a watershed moment for both the conglomerate and the UK retail sector, reflecting a broader trend of global retailers seeking to unlock value and sharpen strategic focus through structural change (Times of India, May 2025). The move comes at a time of leadership instability at Primark, with the abrupt departure of its CEO in April 2025 (Fashion Network), and amid slowing sales in its core UK and Ireland markets, where competition from online fast fashion and second-hand platforms is intensifying (Retail Gazette, November 2024). Analysts remain divided on whether Primark, as a standalone entity, can close its valuation gap with peers like Inditex and H&M, given current performance and market headwinds (Fashion Network, November 2024). Despite these challenges, Primark continues to innovate with new category launches such as Primark Home (Fashion United, January 2025) and to expand internationally, particularly in the US and Gulf markets, where franchise opportunities and store openings have shown strong consumer demand (Fashion Network, November 2024; Retail Week, November 2024). The demerger will expose both businesses to greater scrutiny and risk, but also offers a window for Primark to adapt its model, focus on international growth, and respond to evolving consumer sentiment and sustainability pressures.

Primark spin-off plan gets cool reception