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Most FTSE 100 shares are engaged in only one line of enterprise. However this isn’t the case with Related British Meals (LSE: ABF). I’ve lengthy considered its eclectic assortment of companies beneath one umbrella as a supply of power by diversification. Nonetheless, with the share value down 40% over the past 10 years, is my loyalty misplaced?
Primark
By far the largest income for the corporate comes from its retail operations. Worth trend/way of life retailer Primark has bucked the pattern by constructing a thriving bricks and mortar enterprise. Final 12 months, it opened up eight new shops and has 459 throughout the globe.
The actual progress story for Primark in H1 2025 got here from central and jap Europe the place gross sales grew 21%. The US additionally confirmed good momentum, with gross sales up 17%. This was bolstered by the opening of its first retailer in Texas and a model advertising and marketing blitz within the New York metro space.
Nonetheless, the UK market, which accounts for almost half of all gross sales, declined by 4%. Consequently its complete market share lowered from 6.9% to six.7%.
On-line presence
The corporate might blame a gentle autumn for poor gross sales however I’m starting to marvel if its lack of response to constructing a business on-line presence hasn’t assist.
Click on & Gather, which it started rolling out in 2022, is starting to lastly construct momentum. It expects the service to be accessible in 187 shops by June, 80% of its UK retailer property. Nonetheless, it has no intention of branching out and providing a full on-line expertise. Certainly, it continues to speed up spending on retailer modernisation.
Grocery
Exterior of Primark, many of the firm’s various assortment of internationally recognisable manufacturers continues to carry out properly. One of many standout performers is Twinings. Black tea gross sales have been notably robust. This all ties into its ‘wellness’ tea class of inexperienced, natural and fruit variants. These have grown at a compound annual progress charge of seven% since 2022.
However its power in a lot of its manufacturers was offset by continued declining gross sales at Allied Bakeries, which producers the Kingsmill model.
Rising working losses at its bakery division has compelled it right into a strategic assessment. Within the final week, rumours have emerged that it’s in talks to merge with rival Hovis. Whether or not a deal goes by or not, it has a mammoth job of arresting sliced bread gross sales to extra speciality loaves.
Dividend
The enterprise stays a dependable, if not spectacular, dividend payer. It at present yields 3.3%. It isn’t simple to forecast future payouts as a result of a lot of its returns are attributable to particular one-off funds.
Saying that, its particular dividends do are typically very beneficiant. Between 2023 and 2024, dividend per share elevated by 50%. The interim dividend, which might be paid in July, is ready on the identical degree as final 12 months.
Regardless of the issues confronted at particular person companies, I nonetheless consider the sum is healthier than its components. It stays a conservatively-run, majority family-owned enterprise with a powerful stability sheet and low debt. It’s a traditional buy-and-hold inventory, in my books.
Through the years, the reinvested dividends, in addition to a latest top-up share buy, imply that it has now develop into one among my largest holdings. I really feel it’s one to contemplate.
