Not even worth retailers are escaping weak spot on the excessive road as customers tighten their pursestrings. This was underlined by Related British Meals (LSE:ABF) on Tuesday (29 April), whose shares have tanked amid information of disappointing retail revenues.
At £20.60 a share, the share value was final 8% decrease in each day buying and selling. Extra bother could possibly be in retailer as ‘Trump Tariffs’ and reactive coverage from US buying and selling companions impacts its Primark division.
Nonetheless, I’m questioning if the dangerous information is now baked into the cheapness of ABF shares. In actual fact, I’m contemplating whether or not the corporate may now be one of many FTSE 100‘s most engaging worth shares to think about.
Let’s have a look.
Not so candy
At group stage, revenues fell 2% to £9.5bn within the 24 weeks to 1 March, ABF stated. Adjusted working revenue, in the meantime, tanked 12% to £835m.
ABF is a sprawling enterprise that manufactures and/or sells clothes, sugar, meals substances, agricultural merchandise, and fashionable client meals manufacturers (like Kingsmill bread and Twinings tea). Whereas such diversification helps it higher soak up sure buying and selling points, bother on the first two divisions have outweighed robustness elsewhere in current months.
Weak sugar costs pulled divisional revenues 6% decrease, to £1.1bn, and noticed the unit swing to an adjusted working lack of £16m from a £125m revenue a 12 months earlier.
Nonetheless, continued stress at Primark (accounting for 47% of group revenues) is what actually spooked the market. Gross sales right here dropped 1% within the first half to £4.5bn, as turnover throughout its essential UK and Eire shops fell by 4%.
As soon as once more, Primark’s shops within the US and Mainland Europe — the place the enterprise is quickly increasing — helped to offset weak spot right here. Gross sales will increase outdoors its house markets meant divisional adjusted working revenue rose 6%, to £540m.
However ABF warned that issues may get a lot harder. It stated that “cautious” shopper sentiment “is unlikely to enhance as markets proceed to face uncertainty and instability following current tariff bulletins by the US, retaliatory actions by China and the danger of additional tariff commerce wars.” It added that confidence may fall additional as recessionary dangers enhance.
Ought to I purchase the shares?
On this local weather, traders ought to anticipate additional turbulence for Related British Meals and its share value. But as a long-term investor, I’m contemplating whether or not now could possibly be time to purchase in.
As I alluded to earlier, its shares look fairly enticing from a worth perspective. Right this moment’s plunge leaves the corporate buying and selling on a price-to-earnings (P/E) ratio of 11.3 instances for this monetary 12 months (to September 2025). That is far beneath the corporate’s five-year common of slightly below 18 instances.
ABF shares additionally supply a wholesome 3.3% dividend yield as an added sweetener, it’s above the five-year common of two.2%.
Commerce tariffs may have a big impact on Primark’s gross sales and prices going ahead. However on steadiness, the outlook for ABF’s retail division stays a compelling one for me.
The worth retail market nonetheless has room for appreciable long-term development, based on analysts. And Primark’s growth in scorching abroad markets (just like the US, and Central and Jap Europe) places it in nice form to use this chance.
On steadiness, I believe ABF shares are value critical consideration proper now.
