Primark’s sales edged higher in the lead-up to its planned spin-off, although its parent company, Associated British Foods (ABF), is facing challenges in its sugar division. The budget fashion retailer reported a 3% increase in sales, reaching £2.9 billion over the 16 weeks ending June 20.

Despite Primark’s steady performance, ABF’s sugar business is forecasting an annual loss of up to £60 million, significantly worse than the previously anticipated £25 million deficit. The company attributed this deterioration to the prolonged and severe conflict in the Middle East, which has driven up gas prices substantially. Meanwhile, sugar prices in Europe have remained flat, compounding the pressure on the division’s profitability.

Primark’s expansion in the United States is progressing well, according to ABF. The retailer opened its first New York City store in May, an event marked by the attendance of celebrities including actress Sarah Jessica Parker. Across its 486 stores in 19 markets, Primark continues to contribute more than half of ABF’s overall profits.

ABF reaffirmed its intention to separate Primark from its food businesses by the end of 2027, targeting a clearer focus for both arms of the company. The spin-off aims to allow each entity to pursue independent strategies, with Primark viewed as a high-growth consumer brand and the food businesses, including the sugar operations, subject to different market dynamics.

While the sugar division faces near-term setbacks linked to energy costs and geopolitical events, the company’s outlook reflects confidence in Primark’s ongoing expansion and profitability, particularly in international markets such as the United States.