On one side ABF owns some well-known brands such as Twinings, Pataks and Jordans cereal. They also produce sugar and provide ingredients used in baking and agriculture. Confusingly though, nestled amongst the food-focused segments is the high street stalwart Primark. Primark accounts for c.40% of group revenue and, before the pandemic, was the key driver of ABF’s growth.
Primark has unsurprisingly had a tough few years as the retail chain’s lack of online presence has seen it lag behind ecommerce peers such as Boohoo. The risk Boohoo presents to ABF has been evident since well before the start of the pandemic.
Whereas in the past Primark’s model of vast stores with ultra-low prices was able to keep high street competitors such as H&M at bay, online fast fashion retailers can now increasingly compete with Primark on price whilst providing greater convenience. As the return to normality approaches, investors will be asking whether Primark can keep competing in a world increasingly dominated by ecommerce.