Penneys/Primark owner Associated British Foods has reported a 10% fall in first-half profit, reflecting a weak performance from its sugar business which also saw its full-year outlook slashed, sending the group's shares down 8%.
AB Foods also owns major grocery, agriculture and ingredients businesses.
It maintained its annual guidance for its key Primark clothing unit - "low single digit" sales growth and an adjusted operating profit margin broadly in line with the 11.7% achieved in 2023/24.
It said sales growth at Primark, which contributes about half of group revenue, would be driven by new stores in continental Europe and the US, offsetting weaker sales in the UK and Ireland.
Total sales at Primark, whose boss Paul Marchant resigned last month over inappropriate behaviour, rose 1% to £4.5 billion in the six months to March 1, though like-for-like sales in the UK and Ireland fell 6% with the business losing market share.
"While we continue to assume our trading in the UK remains challenging in H2 2025, there have been some early signs of improvement in recent weeks," the group said.
Weston said Primark's UK like-for-like sales had been positive in the second half so far.
However, the outlook for the sugar business was grim, with the group forecasting a full-year adjusted operating loss of up to £40m, reflecting persistent low European sugar prices, a loss at its UK bioethanol business, Vivergo, and challenges in Tanzania and South Africa.
The group was previously forecasting sugar to make a 2024/25 profit of up to £75m. It made £199m in 2023/24.
It said it was close to completing a review of its Spanish sugar business Azucarera, and was considering mothballing or closing the Vivergo plant unless there were changes to UK bioethanol regulations regarding imports.
The group is also evaluating "strategic options" for its loss-making Allied Bakeries business after it lost a contract with supermarket Tesco.
Weston was dismissive of a recent media report which suggested the group was considering spinning off Primark.
AB Foods maintained guidance for its grocery business, which also includes brands such as Twinings tea, Jordans cereals and Ovaltine drinks, and for its ingredients and agriculture divisions.
First half group adjusted operating profit, its preferred profit measure, was £835m, on flat revenue of £9.5 billion on a constant currency basis.
Meanwhile, Associated British Foods' Primark clothing retail business is committed to expanding in the US despite President Donald Trump's erratic approach to tariffs, its boss said today.
Primark's US business accounts for about 5% of the unit's total sales. It currently trades from 29 stores in the US and has signed an additional 18 leases.
Trump's stream of tariff announcements, roll-backs and exemptions has left some firms wary of committing to expansion.
However, AB Foods chief executive George Weston said Primark was "absolutely" committed to a plan to have 60 US stores by 2026 and remains confident it can succeed in a market that has been a graveyard for some of Britain's biggest retailers, including Marks & Spencer and Tesco.
Weston told Reuters in an interview that Primark would take the "(tariff) hits where we have to take them and before we take more substantive actions wait to see where we really are."
But he said Primark could benefit from Trump's move to end the "de minimis" duty exemption, which allows shipments worth less than $800 duty-free entry to the US and has helped companies like Shein keep prices low.
"De minimis imports in the US are very, very large, they supply a lot of Americans who don't know about Primark yet but are looking for value," he said.
"With prices going up from this part of the trade, I wonder if some Americans might start going back to shopping centres to find value there," he added.
